A Theory of Exploitative Child Labor

Abstract

Child labor laws should aim to protect children who work, instead of trying to remove children from work. In this paper, we identify an instance when the risk of exploitation lowers the expected bene…t of child labor to the child,and therefore suppresses child labor force participation. Targeted legal intervention that lowers or removes the risk of exploitation raises child participation in the labor market, child welfare, and overall societal welfare. Targeting on child labor more broadly may reduce child labor force participation, child welfare, and overall societal welfare. Our key assumptions for generating these results are that parents decide for each child based on their child's best interest, that parents face imperfect information about the risks their children confront upon entering the labor market, and that firms may choose to exploit this information imperfection by employing children under forced-labor-type conditions.child labor, exploitation