DP3733 Voting with your Children: A Positive Analysis of Child Labour Laws

Author(s): Matthias Doepke, Fabrizio Zilibotti
Publication Date: February 2003
Keyword(s): child labour, dynamic general equilibrium, fertility, inequality, political economy, transition
JEL(s): J13, J24, N30, O11
Programme Areas: Labour Economics, Public Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=3733

We develop a positive theory of the adoption of child-labour regulation, based on two key mechanisms. First, parental decisions on family size interact with their preferences for child-labour regulation. Second, the supply of child labour affects skilled and unskilled wages. If policies are endogenous, multiple steady-states with different child-labour policies can exist. The model is consistent with international evidence on the incidence of child labour. In particular, it predicts a positive correlation between child labour, fertility and inequality across countries of similar income per capita. The model also predicts that the political support for regulation should increase if a rising skill premium induces parents to choose smaller families. A calibration of the model shows that it can replicate features of the history of the UK in the 19th Century, when regulations were introduced after a period of rising wage inequality, and coincided with rapidly declining fertility and rising educational levels.