Perverse Consequences of Well Intentioned Regulation: Evidence from India’s Child Labor Ban

Abstract

Although bans against child labor are a ubiquitous policy tool, there is very little empirical evidence on their effectiveness. In this paper, we examine the consequences of India’s landmark legislation against child labor, the Child Labor (Prohibition and Regulation) Act of 1986. Using data from employment surveys conducted before and after the ban, and using age restrictions that determined whom the ban applied to, we show that the relative probability of child employment increases and child wages (relative to adult wages) decrease after the ban. Our main specification relies on comparing changes in work probabilities over time for children of the same age but with siblings who are rendered either eligible or ineligible for legal work when the ban is implemented. The increases in the probability of economic activity are largest for children (i) in areas where the industries targeted by the ban play a larger role in local labor markets, (ii) in areas where the probability of employer inspections is higher, and (iii) in families that are poorer. These results are consistent with a theoretical model building on the seminal work of Basu and Van (1998) and Basu (2005), where families use child labor to reach subsistence constraints and where child wages decrease in response to bans, leading poor families to utilize more child labor. We also find decreases in child participation in schooling (for younger children only) and no economically meaningful change in household outcomes like assets or calorie intake.

The Health Impacts of Hazardous Chemical Exposures among Child Labourers in Low- and Middle-Income Countries

“…Although in an ideal world, hazardous child labour should not exist, this complex societal issue does not have easy policy solutions. Banning child labour can have adverse consequences, for example, increased child labour prevalence [97]. It became costlier for employers to hire children in India, which reduced child wages, prompting families to send more children out to work [97].…”

“…Banning child labour can have adverse consequences, for example, increased child labour prevalence [97]. It became costlier for employers to hire children in India, which reduced child wages, prompting families to send more children out to work [97]. In Brazil, banning child labour had differential effects, with non-white youth being less likely to be employed or have a formal job later in life [98].…”

Attitudes, behavior, and institutional inversion: The case of debt.

“…The law caused employers to factor in the costs of potential fines and lowered the amount they were willing to pay their illegal child laborers. Poor families, needing the money, responded by having their children work more and go to school less (Bharadwaj et al, 2019). 18 Moralization does not guarantee bad policy, and expression of moral outrage may be perfectly legitimate and enlightened.…”

The Role of Stomach Infrastructures on Children’s Work and Child Labour in Africa: Systematic Review

“…Though household poverty is a key factor for child labour, evidence suggests that increases in household income might not necessarily result in significant reductions in child labour unless other possible risk factors such as structural, geographic, cultural, seasonal and school-supply factors, as well as gender and other demographic traits, are equally addressed [16]. Furthermore, given that these children are required to meet their basic need and costs of schooling, loss of income caused by removing children from work leave them worse off, and caused them to be involved in a work that could be even hazardous and interfere with school and other activities [10,17,18]. Likewise, an attempt to ban child labour through enforcement of minimum employment age also could not yield desired results for all children, as most working children in Africa are involved in agriculture and informal sectors where such mechanism is less likely to be effective [19].…”