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A Dynamic Analysis of Child Labor with a Variable Rate of Discount: Some Policy Implications

Author

Listed:
  • Das Satya P

    (Indian Statistical Institute, Delhi, das@isid.ac.in)

  • Deb Rajat

    (Southern Methodist University, rdeb@smu.edu)

Abstract

This paper analyzes the problem of child labor in an infinite-horizon dynamic model with a variable rate of time preference and credit constraints. The variability in the rate of time preference leads to the possibility of multiple steady states and a poverty trap. The paper considers the long-run and short-run effects of an array of policies like enrollment subsidy, improvement in primary education infrastructure, lump-sum subsidy, and variations in loan market parameters. We distinguish between policies that reduce child labor in the long run only in the presence of a variable discount rate and other policies which work whether or not the discount rate is variable. Credit-related policies belong to the former group. Policies that reduce child labor and increase family consumption in the long run may have an adverse effect of lowering consumption in the short run.

Suggested Citation

  • Das Satya P & Deb Rajat, 2006. "A Dynamic Analysis of Child Labor with a Variable Rate of Discount: Some Policy Implications," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-30, August.
    • Handle: RePEc:bpj:bejeap:v:contributions.5:y:2006:i:1:n:25
    DOI: 10.1515/1538-0645.1562
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    Citations

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    Cited by:

    1. Edmonds, Eric V., 2008. "Child Labor," Handbook of Development Economics, in: T. Paul Schultz & John A. Strauss (ed.), Handbook of Development Economics, edition 1, volume 4, chapter 57, pages 3607-3709, Elsevier.
    2. Abou, Pokou Edouard, 2016. "Does the Unavailability of Educational Resources in Schools Determine Child Labor in Sub-Saharan Africa? A Micro-econometric Analysis from Cȏte d’Ivoire," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 5(2).
    3. Marco A Espinosa-Vega & Richard C. Barnett, 2005. "Barriers to Capital Accumulation and the Incidence of Child Labor," IMF Working Papers 2005/220, International Monetary Fund.
    4. Huamaní-Huapaya, Edson Raúl, 2019. "Persistencia Intergeneracional del Trabajo Infantil y Adolescente en Perú [Intergenerational Persistence of Child Labor in Peru]," MPRA Paper 101247, University Library of Munich, Germany.
    5. Lutfullah Lutf & Shahadat I Haq Yasini, 2018. "Factors Contributing to Child Labor in Afghanistan: A Case Study in Jalalabad City," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 3, pages 348-372, September.
    6. Basu, Kaushik & Zarghamee, Homa, 2009. "Is product boycott a good idea for controlling child labor? A theoretical investigation," Journal of Development Economics, Elsevier, vol. 88(2), pages 217-220, March.
    7. Kaushik Basu & Homa Zarghamee, 2008. "Product boycott a good idea for controlling child labor? A theoretical investigation," Discussion Papers 08-09, Indian Statistical Institute, Delhi.

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