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Is Bonded Labor Voluntary? Evidence from the Liberation of the Kamaiyas in the Far-Western Region of Nepal

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  • Espen Villanger

Abstract

The UN estimates that 20 million are held in bonded labor. Several economic analyses assert that bonded laborers accept these contracts voluntarily, which could imply that a ban would make such laborers worse off. We question the voluntary nature of bonded labor, discuss different theories and new evidence on the issue, and propose a new mechanism whereby landlords keep workers trapped. With different types of landlords not revealed to the laborer, we show how some landlords manipulate loan terms so that the laborer becomes bonded if future labor is rendered as collateral. Enforcement mechanisms and the monopolistic market for credit thus play a joint role. Providing alternative sources of credit, offering proper conflict resolution institutions for settling labor-contract disputes and banning the practice of bonded labor could emancipate bonded laborers, which would make them better off.

Suggested Citation

  • Espen Villanger, 2006. "Is Bonded Labor Voluntary? Evidence from the Liberation of the Kamaiyas in the Far-Western Region of Nepal," CMI Working Papers 16, CMI (Chr. Michelsen Institute), Bergen, Norway.
    • Handle: RePEc:chm:wpaper:wp2006-16
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    More about this item

    Keywords

    Asia Nepal Bonded labor Debt slavery JEL classification: C72; D40; J41; O10;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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