Don’t jump to conclusions. Children who work for pay usually make less than adults, but they are usually less productive too. It is far from obvious whether their employers take in more profits, or whether child labor undercuts jobs and wages for adults. You can speculate on this all you want, but now, for the first time, there is empirical evidence.
My study, “Child Labor Wages and Productivity” has just been published by the International Labor Organization (ILO). Working with teams in four countries, we surveyed children and their employers in two sectors per country, gathering data on the division of labor between adults and children, relative wages and productivity, firm-level factors, employer motivation, and the social context. You can read about children who fish off the coast of Ghana, repair cars and motor scooters in India and fold fireworks in the Philippines. The analysis is not particularly high-tech, but you can find basic wage regressions and estimates of production functions with child and adult labor inputs. There is also a ton of descriptive material.
The bottom line is, sometimes, under some conditions. When normal people talk about child labor they often assume that children are a gold mine for unscrupulous employers. This can be true, but it’s not the whole story. Meanwhile, when economists study child labor they usually assume the opposite, that the law of one price equalizes unit labor costs across all age levels. This is even less likely to be the case. If you care about child labor and want evidence instead of arbitrary assumptions, I think you’ll find the study up your alley.
It’s a free download at http://www.ilo.org/ipecinfo/product/viewProduct.do?productId=7065.
10 comments:
OK - you have me interested in reading this. An aside on the definition of exploitation as the difference between the value of marginal product and the wage rate. the 1st paper I saw on this argued that Michael Jordan was the most exploited person in the world as his total salary was a mere $40 million for the year v. his productivity which added up to $50 million.
Doesn't exploitation of children have anything whatever to do with their not being able to go to school and such? It's all a money issue, and whether businesses are paying more or less? In other words -- I don't know because I'm not an economist -- is there no marality whatever among economists?
pgl,
Couldn't we say that Jordan is actually well paid in that he is receiving four times the amount that his employer is earning from the excess productivity? Maybe it's an even greater multiple in Jordan's favor if the extra $10 million is before expenses that can be attributed to Jordan's portion of the total productivity of the team.
qq,
You may be surprised to learn that very few people practice "morality"
as it may be applied to daily behavior, including the conceptual
aspects of behavior. Morality is a relative concept that is applicable to the behavior of others when they fail to adhere to some others' moral frame of reference. It's like religion, "I love god, and I'll kill anyone who disrespects my god."
I was going to write something like Qrazyqat before I saw his/her comment. My new book, Invisible Handcuffs, is meant to extend that argument.
Just to clarify: I am not doubting that child labor (in its ILO definition) is something to be overcome, that it is usually harmful to children and their future, etc. (I did an earlier ILO study that focused much more on this.) The issue is narrower, whether employers make more money by hiring children instead of adults. It's important in its own right, don't you think? For one thing, it tells us whether the problem of child labor is entirely on the supply side (willingness of households to have their children work), as most economists believe, or whether there is also a demand side (employer) aspect.
Anecdotal evidence would suggest that child labor is a social phenomenon. That is, in some societies it is not sufficient for mom and pop to bring home the bacon. The little brats have to contribute as well. Those are the really wonderful societies wherein the population of workers is full exploited in such a way that there is no capital benefit to them, the workers. The employer keeps all the gain, paying enough to barely meet subsistence levels. I'm for full employment; children, mom, pop, the pet dog and maybe even the cripples.
Yes what Qrazycat said.
Child labor uncompensated by education and true skill training is simply a productivity transfer from the future to now, in effect it is eating the seed corn.
Now generally speaking I am a little suspicious of the magic ascribed to the skill premium, in truth any given country only needs so many neuro-surgeons and so many engineers, but I doubt many countries with large amounts of child labor are in fact skill saturated or have the ability to screen talent out of the whole population pool (just because you have your new Bachs and Mozarts in the Music School you don't want to leave your Beethovens gutting fish).
Along with the time shift in productivity you also have to look at the historical record. In Industrial Era Britain certain types of machinery were specifically designed so as only to be operable by children and young women. This issue wasn't so much one of efficiency, the machines could have been scaled up, it was that children and young women were rightly considered easier to control than a work population of grown men. That they could be paid less might or might not be a bonus depending on relative productivity, but at a minimum you could be relatively sure you wouldn't have some violent strike action.
Why do employers like those H1B visas? It is not I think because they cannot find American workers, the market is full of underemployed engineers that could be retrained, and it can't totally be explained by the wage differential though that is important. What it does give employers is some explicit control over worker mobility, you end up with a pool of relatively well compensated indentured servants.
You really cannot examine labor economics without at least running your theory by labor history to see if you are missing some endogenous factors. And the balance between employer and employee power either internally (using child labor) or externally (having the implicit backing of state police power) is almost always a factor.
The point about lack of schools is valid and important. Many of the most egregious cases involve this, often with corruption by elites involved. Thus, one of the most notorious centers of child labor is the deeply poor Indian state of Bihar, where money sent to fund schooling is regularly siphoned off by landlord elites for their families, with no schools being built or run. When there are no schools for the kids, work is all there is...
Barkley
Thanks for the link. The paper looks really good. I have two students who're writing papers on child labor currently and this will definietly be useful for them.
jumping to conclusions here.
the idea that child labor is to be evaluated on its "productivity" is revolting.
[why do you keep playing games with your commenter identity format. if it's to keep me from knowing what to enter, you have succeeded.]
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