Corel Office Document

Econ 280 paper for Thursday.

http://www.econ.yale.edu/~cru2/pdf/kid.pdf

Sent from my iPad

Comments

[Christine Pence]

“Child Labor,” by Chris Udry touches upon many of the themes and ideas we have so far discussed in this course.
I. He begins by describing child labor as a necessary evil, with a strong negative correlation existing between child labor and household income. This relates to the Duflow piece on women empowerment when she says that poverty leads to hard choices and women empowerment is negatively correlated with the need to make the hard choices.
II. Udry goes on to make an interesting point about the time delay between the benefits and costs of child labor. Since the costs of child labor (primarily a lack of education) affect the individual later in life, it is hard for the agent to put costs in perspective. Consequently, fighting child labor is difficult. “The Economic Lives of the Poor” discussed that one of the reasons the poor do not save is because they think primarily in the present and have a difficult time planning for the future.
III. With child labor, we also see the ever-present theme that a cause and a symptom of poverty are one-in-the-same.
IV. This same article, as well as the pieces on women empowerment and malaria (and maybe others that have slipped my mind), discuss the fact that children are assets and insurance; they provide a safety net of labor for the household.
V. Related to this is the theme of agency and child welfare. In many of the articles we have read, there exists a positive correlation between a mother’s income and her children’s welfare (in this case a reduction in child labor.)
VI. When Udry discusses policy, education appears to be the most effective means by which to fight child poverty. Week after week, investment in human capital appears to be the best policy for fighting poverty. Most recently Schultz argued that policy should focus on investments in people through health, nutrition and education. Both Schultz and Udry discuss the effectiveness of incentives in fighting poverty.

This overview of some common themes throughout this course illuminates a few important points. First, simple poverty policy changes have radiating effects. Second, policy changes should focus on investments in human capital. Throwing money at a problem is often easier and less time consuming than coming to understand the root of a problem and addressing it at that core. Third, investments in human capital instigate a “domino effect,” where one improvement leads to another. For example, increasing education leads to not only a decrease in child labor, but also an increase in women empowerment, which leads to an increase in immunizations among children, which leads to decreased fertility rates, which leads to an increase in education, and so on. Fourth, fighting poverty through investments in human capital is a virtuous circle. This last example illustrates this point well.

[Sage Timberline]

I thought Christine summarized this paper brilliantly, with four spot-on conclusions at the end. Her fourth caught my attention in particular - that investments in human capital allow a virtuous cycle of more investment, which could ultimately help break the agonizing poverty cycle we read about every week. I think it is important to note that, in the same way desperately poor families should borrow money now so that their children can be educated and potentially escape the deadly poverty cycle later, we should undertake the cost of lending money to these families so that society can ultimately benefit from better educated citizens and continuously lower poverty rates. Of course, we have to make sure the current cost doesn't overwhelm the future benefit, but with the prospect of a healthier, more educated, more satisfied, more productive populace, I think that is unlikely.

One thing I found interesting is that boys are more likely to work than girls (page 2, second paragraph). In several of the past readings, we discussed how families tend to allocate resources to ensure their male children's health above female children's. In a situation of dire need when children are forced to be laborers, I would think it would be more likely that families would send their female children to the workplace and allow their male children to continue going to school, because of higher future benefits for males. I can only guess in this case that male children at a pre-teen or young teen age have the potential to be bigger and stronger than girls of the same age, and may possibly have a greater output in a working position.

I would be very interested to see the relationship between family composition and amount of child labor. Udry mentions several times that turning to child labor is a desperate measure that only occurs when families can't make ends meet otherwise. I wonder what specifically the "ends" are that need meeting - i.e. is part of what is contributing to the lack of family resources the fact that there are too many children in the family? Is the problem a burden of older relatives who cannot work? Or is it not a problem of family composition, but simply that resources are scarce and two working parents is not enough to provide, indicating a broader economic problem? We've discussed before that families in extreme poverty often have many children to ensure that enough of them live to reproduce further. But this could also be a contributing factor to lack of resources. What might these extremely impoverished families look like with free and accessible birth control? Would that cause them to have fewer children and experience less resource shortage? Or would it have no effect, if they are having children out of pure necessity? One more thing - how healthy are children who are going to school vs those prematurely in the workforce? Undoubtedly, this would vary a lot depending on quality of school and quality of workplace. Still, I think it would be interesting data to consider, because if sending children to the workforce makes them prone to injuries or sickness, this would be another serious cost to child labor.

[Lizzie Weston]

I thought this was a very interesting article that reinforced our concept of poverty as a vicious cycle. Udry explains how poverty and child labor are mutually reinforcing: when a family is poor, the children have to leave school in order to work and help their family survive. This action in the present leads to increased poverty in the future because these children were less educated and cannot get jobs, which traps them in the same poverty. Education is seen in many sources and facets of development as one of the most important ways to invest in human capital. Even if these children have access to education, they are often unable to reap the benefits if their family is struggling by. The author suggests that subsidies for families to keep their children in school and out of the labor force is the best way to combat and break this reinforcing detrimental cycle. Subsidies allow families to invest in education even though they have a lack of formal investment and saving infrastructure, the greatest hindrance to the families according to Udry.
I found two things in this article that I hadn’t initially thought about. The first was that the vast majority of child labor occurs on family-run rural farms. I think that when I thought of child labor, factories and similar harsh working conditions came to mind. While this is an important issue that we as American consumers deal with daily, it is not always the structure for child labor. I also thought it was very interesting to think about the difference in agency. This is coupled with how the costs and benefits of child labor are dealt with in different periods of time. That means that children who are forced into the labor market usually don’t have a say in their role for the families. While parents and the rest of the family reaps the increased benefits of child labor, it is largely the child who has to deal with the costs on under-education in the future when he or she has to find a job. Therefore, although parents usually try and do the best thing for their child, they are forced to make decisions that will hinder them in the long run. This might also harm the parents if they are relying on their children to support them in their old age, a household structure that is seen in most developing countries.

[Peter Partee]

Peter Partee
Econ 280 – Development Economics
Professor Casey

“Child Labor” Christopher Urdy

Urdy initiates his piece on child labor by describing the trade-off occurring when a child enters into a labor market: the child’s future human capital is sacrificed for immediate financial benefit. In other words the opportunity cost of engaging in child labor is that child’s schooling and acquisition of important non-work related skills. What is most disturbing to me about this transaction is that, while it may occur out of dire necessity, the child’s freedom to pursue what might be best for himself/herself is restricted entirely; Amartya Sen’s “capabilities” and “functionings” are appropriate comparisons here. Section 2 contains dire statistics: “one in ten of the world’s children were working full-time.” Child labor affects Asia the most in aggregate terms, but Africa the most proportionally. Also, child labor is largely comprised of those in agricultural and rural areas.

Later in Section 2 it is said that household incomes and child labor have a strong negative relationship, yet increases in wages don’t necessarily change households’ decisions to engage in child labor. If the child is getting paid more, then the parent’s opportunity cost of sending the child to school increases, this substitution effect works against efforts to decrease child labor. I found this point to also be particularly revealing: parents in poor households, more so than in other households, seem to be profit-maximizing unitary rational actors, rather than utility maximizing. Perhaps this is because poverty places families in such dire circumstances that utility is derived from any marginal increase in profit, which can significantly change standards of living.

Urdy describes child labor as having a self-reinforcing effect. Children who are forced into child labor are significantly less likely to attend school, as they age - adults who are less educated will have lower incomes and will be less likely to provide opportunities for their children to go to school, and in turn are forced to make their children enter labor markets. Urdy discusses how the cycle can be broken if one generation of parents can increase their incomes to high enough levels to avoid the necessity of child labor, enabling the child to pursue investments in his or her human capital.

Urdy also discusses the imperfect information involved in parents’ decisions to send their child into labor markets. If parents were fully aware that their children would receive a lesser wage, because of decreases in human capital investment due to engagement in child labor, then they would be able to more appropriately calculate the costs associated with doing so. However because the perceived present value of child labor is skewed, Urdy estimates that parents are more likely to send children into labor markets. Also needing to be incorporated in parents’ decision-making process with regard to child labor are the social benefits associated with investments in education for children. Educated childrens’ production possibilities frontiers socially and financially are much greater.

[Nick Z.]

The exchange of immediate benefits for a child's future welfare is an interesting concept. In the U.S. during a recession, if the primary "bread winner" losses his or her job, another family member will enter the labor force to mitigate the lost income. Of course this is most often a spouse that enters the labor market as we have strict laws prohibiting child labor, but the concept of the added worker effect can be applied to developing countries. A child will be forced into the labor market when the income of the family is low; the child must work to mitigate losses.

The link between bargaining power and whether or not a child enters the labor market makes a lot of sense. If a wife's bargaining power in a household is a function of her dependency on her husbands income, the wife would gain decision making power, influencing the child's future welfare. The ability to improve ones family's overall welfare provides one with bargaining power or the power to make decisions within the household.

The last matter I wanted to comment on is in regards to the marginal benefits children have to education. It seems as though the lowest income students receive the largest marginal benefit from investing in schooling. To improve the private rate of return to investing in schooling would incentivize parents to invest in education.

[Olivia Davis]

Throughout Udry’s article, he alludes to the idea that child labor is often justified by its short-term consequences, as opposed to its long-term consequences. In poor households in developing countries, the short-term financial benefits are the main reason for child labor. However, in the future, child labor has detrimental effects on human capital; in order to work a full-time job, children do not have the time to get an education which would likely earn them more income when they are adults.

Due to the vicious cycle of poverty, it is unlikely that families who use child labor fully understand the benefits of educating their children; they have seen few instances of children being educated and overcoming poverty, and probably do not have the resources to take the risks. With child labor, the families know the returns because they happen rapidly: children bring home a paycheck or crops on the farm grow. When a child is not working and in school, on the other hand, it will take a longer time for families to see the benefits: the child must graduate and then find a job.

The topic of education arises frequently in development economics. In my last post, I mentioned the use of health education as a preventative measure for reducing malaria. I think that the same concept can be applied to help people comprehend the long-term benefits of sending children to school in lieu of sending them into the workforce. If they have a better grasp on the tradeoffs, I think that families will feel more confident that the future outcomes will be far greater when children go to school instead of working, and thus be more willing to take the risk of sending their children to school.

[Colleen Paxton]

Christopher Udry presents the benefits and costs of child labor as well as the reasons behind taking a child out of school and putting them into the workforce. One of the first aspects of development we discussed was that decisions by the poor may seem irrational, but that is because there is a lack of choice. Options are limited and there is a short-term focus. This is the case with child labor. The benefits of child labor are immediate—the family takes the wage and there is reduced education expenditure. But the costs are more long-term—the child who goes to work on the farm will have lower future earnings due to less education. There are also costs to that child’s future children, as their own children will not be as healthy as those of well-educated parents. How can this chain be broken? Udry calls it a “vicious cycle of poverty, in which the descendants of the poor remain poor because they were poorly educated.” Udry suggests the same causality can be used to sustain growth. But as we have learned from Dani Rodrik, igniting and sustaining growth are two different things.

What could be done to turn a circle of poverty into one of prosperity? Udry presents policy options from bans to trade sanctions, but says the best option is subsidies for school enrollment. We have discussed the positive impact of the Progresa progam in Mexico, and it seems that the solution of a subsidy for sending children to school conquers the myopic, constrained decision-making faced by poor families. In the short-term, they are receiving extra income (or food as in Bangladesh). In the long-term, the investment in human capital for their children can bring greater returns to their descendants. Choices are no longer limited and the trade-off between education and work disappears.

[Daniel Molon]

In his article, Udry examines child labor leading to the lack of human capital development among poor families. Poverty and lack of school produce a circular flow that promote each other, as poor families must utilize all the potential labor they have in order to supplement their household income. This leads to children being withdrawn from school to prematurely enter the labor force. One argument Udry makes is that greater access to credit and finance would help make these poor agricultural families less susceptible to price shocks in the market for cash crops, which is a highly volatile market and one that many poor families in Africa engage in. This would allow students to maintain continuous enrollment in school, which would provide them with better education and skills to gain better employment.

However, there must be jobs that require a more adequate education in order for these poor children to try and improve their human capital, otherwise the marginal benefit of their education would be none, if their only employment option is farmer anyway. Beyond just the private returns from a better education, there are also social returns that would further improve development in Africa, such as improved health, nutrition, and political participation. Because the private returns are not enough to convince people to invest in their children’s education, the government should provide some form of incentives to either increase the returns or to decrease the cost. One way to increase the private returns would be to improve the school system or attract higher skilled jobs to the country that would increase the demand for workers with a higher human capital. To decrease the cost, the governments could provide better transportation to school, provide tax rebates to families for children’s school attendance, or adjust the time of school to allow for the children to still participate in work at home.

[Jspencer]

In this article, Christopher Udry discusses how high rates of child labor in LICs, relative to HICs, contribute to the underdevelopment of human capital, namely interfering with schooling. Since others have outlined the general messages of the essay, I’ll focus on one issue that I thought was particularly interesting to me: how access to credit affects child labor and education. Child labor is primarily a problem in agricultural regions. Because agriculture is highly vulnerable to stochastic environmental events (e.g. flood, drought, hurricane), the income of poor households that rely on agriculture is highly susceptible to exogenous shocks. Accordingly, when theses households’ incomes take a hit due to stochastic events, parents are force to either reallocate already limited capital within the household to keep the child in school, or pull the child out of school to work. Because the former is often not a viable choice in extremely poor households, many families are forced to put their children to work. The only other ways to keep the child in school, given a decrease in income due to random events, is if the household has access to credit or a means to save. Just as in health care, access to credit allows a family to absorb this exogenous shock without sacrificing the well-being of their children (e.g. education and health). I think that access to credit in agricultural regions would improve investments in education, both directly in times of random events, and indirectly in assuring the security of their investments. That is, (I think) parents would be more likely to invest in education if they have access to credit, even if they never use it, because they will have more confidence in their investment.

[Chase Douglas]

In this class we have learned that one aspect of poverty is the loss of the ability to have choice in your actions. This loss of choice often leads the poor to make seemingly irrational decisions. One such ill advised phenomenon that occurs is child labor. As other classmates have mentioned earlier, a major reason child labor is so prevalent in impoverished societies is due to the fact that there is such a need for the income generated from this labor during the present that parents really have no choice as to whether or not they can choose if a child works or goes to school. As others have said this necessity to reap immediate gains while sacrificing investment in a child's future (his or her education) is something that leads to a poverty trap in which being born poor ultimately leads you to remain poor because of a lack of opportunity.

What I found extremely interesting about this paper is the solutions given by the Udry to help educate children and break this poverty trap. The schooling subsidy programs in Mexico and Nicaragua seem to be directly aimed at breaking the vicious poverty trap Udry illustrates earlier in the paper. What I would be interested in learning about more would be such subsidies for primary education. I assume what Udry describes primarily pertains to primary education as seen in Nicaragua's subsidy system which is given to students between 7 and 13 years old. I wonder if some sort of achievement based scholarship could then be offered to kids in this program that could allow access to higher levels of education. It seems reasonable to think that with such opportunities available parents would be even more willing to enter their kids into the initial subsidy programs. This would also give students something to work towards, and a reason to really make use of the opportunity given to them.

[Cirimu]

In the “Child Labor” article, the author highlights that one of the main costs of child labor is related to the “reduction in investment on [a child’s] human capital” because children go to work instead of going to school. The author also mentions that poverty leads families to send their children to work instead of school and therefore these children are more likely to remain poor during adulthood as well. While I think that the author’s statements apply to the U.S. or other developed countries where there are solid school systems, I think that the validity of his statements varies in developing countries especially in rural places where the school system is weak. For example, in poor villages in Africa there are schools (infrastructure) but teachers’ attendance is low as well as the quality of education. So I question: In such circumstances, would a child’s human capital really increase if he or she attends school? Would going to such low-quality schools really decrease a child’s vulnerability to face poverty during adulthood? I would argue that the answer to both questions is no. Although the child might benefit emotionally from interacting with other children, if we look only his or her ability to increase earnings in the future, I would argue that by attending low-quality schools the child would be losing time and reducing his/her opportunity to get higher earnings in the future. However, if the child works for example in his or her family’s farm or business- which it is often the case according to the author –he or she would acquire practical labor skills which would make him or her a more attractive laborer and therefore increase his or her earnings potential in the future. Therefore, one could argue that under these circumstances child labor is better than children going to school. Am I then saying that we should encourage child labor? Of course not, I am against child labor. But the reason I raise the questions above it is because even if child labor is successfully banned or if parents have enough incentives to send their children to school, this would not reduce or eliminate the main cost related to child labor. Even if children go to school instead of going to work, if their schools are of low quality (which is usually the case in rural areas where child labor is more predominant), children will continue to bear the cost associated with child labor as their human capital will not increase—their human capital can even decrease since children would stop learning practical labor skills from working.

[Vincent Kim]

Christopher Udry explains that school enrollment conditional cash transfers are effective at reducing child labor because they target the cost-benefit analysis regarding long-term returns to education and short-term benefits of wages or increased household production. Towards the end of the paper, Udry mentions that “more careful cost-benefit analyses should be completed on an urgent basis,” which implies that the factors of cost-benefit analysis depend on the region or community in focus. Some of these variable factors are the types of prevalent jobs, available credit, what types of children have access to certain jobs (based on gender, race, ethnicity, disability), and social norms. These differences most likely produce differences in the demographics of child labor. Knowing these demographical discrepancies in child labor, maybe governments should target certain groups of children a larger proportion of available cash transfers in order to maximize development. By development, I mean reducing child labor, giving more agency to children (in the form of expanded job opportunities after receiving education), and the increased future incomes to grow the economy. I am interested in knowing how many governments have implemented programs like this, and if current programs such as Opportunidades have various demographical targets based on gender, ethnicity, or region. Furthermore, if they countries that have implemented these types of programs have randomized data specific to race, gender, etc. and the effects of varying relative cash transfers to different groups based on varying incentives in cost-benefit analysis among the groups.

[Gyung Jeong]

As Udry highlights in the introduction, the purpose of this paper is to understand the circumstances that lead poor parents to send their children to work instead of helping them to invest in their children’s human capital. There is always a tradeoff between immediate income/benefits and children’s future. As Udry says, “Child labor involves the sacrifice of a child’s future welfare in exchange for a current benefit to the household.” However, we have to think about how this cost-benefit analysis works. The benefits will be the take home wage of the children and the reduced expenditures on education whereas the cost of child labor involves lower future wages when they grow up and the productivity (human capital) associated with the knowledge of education. Also, from previous papers, we learned that children tend to be less healthier under poorly educated parents. Which one is greater? Maybe its about short run vs. long run benefits. Whatever the answer is, it supports Udry’s argument that child labor is high among poor families in developing countries.
He then talks about the mutual relationship between poverty and child labor. This relationship, or a cycle, is that because parents are poor, their children have to work, which means they do not have time for school. Eventually this leads to the lack of investment in human capital and leads them to become poor and this keeps on happening with their future generations. He suggests that if this cycle can be broken somehow, then it can help children to be better educated and alleviate poverty. As Daniel pointed out above, Udry suggests that access of credit can help break this cycle. Udry also points out that child labor can be effectively reduced by subsidizing for school enrollment.

[Bayan Misaghi]

The use of children as labor is a clear market failure. It is a failure where the addition of constraints—laws passed and enforced by the government— will yield fewer children working in the fields and more of them going to school. On Tuesday there was a debate in class about how governments limiting the flow of human capital between nations is a detriment to the world markets in general. This excess use of market constraints sits in direct contrast to the child labor issue. In the case of child labor, we are reminded that people are not always the “logical economic agents” that our classical models assume. The lack of laws and enforcement leads to households acting in their best short-run interests rather than their long run interests. Similarly, though fewer immigration laws would be beneficial to the world society, complete anarchy may not be desirable. There is likely a happy medium between a complete government grip on human capital (the immigration problem) and the lack of laws and enforcement surrounding human capital usage (the child labor problem).

Another issue we discussed in class was the complex problems of school attendance and effectiveness. Udry mentions that child labor is a function of not only the level of poverty in a household but also the economic cost of not having a child working. The paper describes the trade-off of labor vs. schooling in terms of the income and the substitution effect. In this discussion we learn that if wages for children are sufficiently high and even if the family’s income is not in dire need, children may be pulled from school to take advantage of the short-run returns in the labor market. Udry mentions that encouraging school attendance through subsidies is a way child labor can be reduced—perhaps compensating families for the lost wages may be sufficient to have the children sent to school instead of the fields.

Perhaps microfinance may also help. Udry mentions the lack of affordable credit and even the lack of a formal financial market. In class we discussed the use of microcredits less as a means of venturing into completely new businesses and more as a vehicle for consumption smoothing. In the case a families income drops because of an exogenous shock, a microloan may help in keeping children in school rather than using them as a source of short-run income.

[Greta Witter]

As we could have expected, child labor encompasses many themes of development economics. The “insidious evil” involves not only human capital development, but also women’s empowerment, financial market access, and decision making ability. Child labor seems particularly dangerous in analyzing economic development, as it exemplifies the cyclical nature and pervasiveness of poverty.
Udry’s piece discusses many of the possible scenarios and cost-benefit analyses that poor families may face – and yet, I find it unlikely that these rational decision-making processes play out so smoothly in reality. Throughout the term, we have considered poverty and stress’s impacts on cognitive function and decision-making capability. Similarly, it takes a certain level of financial and economic understanding to weigh a child’s present value against her future potential. Poor rural communities often lack access to information. Even further, these sorts of decisions regarding future worth are inherently filled with uncertainty. Though I do not doubt the intentions and altruism of parents, from a policy standpoint, we must be sure to look a bit deeper families’ ability to make the ‘rational’ decision.

[Julia Murray]

As others have mentioned, I found that this article was strongly related to Sen and Duflo's arguments about women's empowerment. Decisions about child labor are not made my the children themselves, but usually by the parents. Any household decision, as Udry points out, it not simply a collective decision, made with equal input from the husband and wife. Instead, as we have discussed in my Labor Econ class, household decisions are made largely on the basis of bargaining power: whoever has the most bargaining power in a household will have the largest impact on household decisions. Bargaining power is a function of income earned by that individual, so men typically have more bargaining power, particularly in developing countries. If women have more access to financing and are able to improve their prospects in the labor market, they will be responsible for a larger portion of household income, directly increasing their bargaining power. As Udry says, "extra income in the hands of mothers is associated with higher levels of investment in child human capital." This reinforces the argument that women's empowerment is an important goal, both because it is an important end itself, and because it will help improve the welfare of the entire household. Not only will the children in the household be positively impacted both by improved health and education in the present, but improved future outcomes that will eventually benefit future generations.

[D]

I think Julia makes a good point. The author, like many of the others we have studied, points to the importance of empowering women in the household. It is clear that this should be an objective in developing, poverty stricken countries. Another thing that struck me was that an increase in wages could lead to an increase in child labor. I think this is further evidence that policy goals should be more specific. A program that focuses on simply increasing income will miss effects such as these.

What I continue to struggle with is the prioritization of the programs we have learned about. Eliminating child labor, empowering women, increasing health standards, bettering education are all worthy goals that have the beneficial effects of decreasing poverty. But given the constraints of a developing country what do we focus on first. What programs will show the highest return? I think it would be interesting to examine some literature that attempts to aggregate some of the studies that suggest these different policy options. If a country were to start with a blank slate and limited funds, what programs would be best to institute first.

-James

[Libby C]

Udry defines child labor as "the sacrifice of the future welfare of the child in exchange for additional current income" (1). According to Udry, child labor is not only a symptom of poverty but also a cause of future poverty. This idea echoes the vicious cycle theme we've encountered this system. I was taken aback by the International Labor Office estimates that 1 in 10 children were working full time in 2000. An "income effect" occurs when increases in household income are associated within increases in schooling enrollment. Udry explains, however, that this is not always the case. When increases in household income result from increases in wages from child labor, a "substitution effect" can take place. The cost of sending your child to school is higher as the household will have to sacrifice that child's wages and forego consumption if they choose to enroll the child in school. The increase in child labor can have an intergenerational effect, creating a "poverty trap" for future generations. Child labor creates long term consequences for immediate benefits. This problem reflects the issues presented in "The Economic Lives of the Poor". It is difficult for poor households to save and often impossible for them to borrow making any long-term planning or investments in the future difficult to envision and to execute.

[Owenandrea]

Urdy’s discussion about how poor credit affects investments in education is an extension of a topic in the Economic Lives of the Poor paper. Poor credit denies households the opportunity to borrow money so that children may attend school—as the immediate benefit of a child’s income must be forgone for a child to attend school. An interesting point that Urdy made is that while the costs of child labor and forgone education are “long delayed and realized by the child…the benefits are immediate and directly affect decision makers within the household” (9), a reason that perpetuates child labor and low education even more. Because of the substitution in poor households of immediate income for future educational benefits—outcomes that have private and social benefits—Udry proposed targeted education subsidies as the best solution for child labor’s implications. He says that the subsidy method “addresses the root causes of child labor” by dealing with financial market problems and “balancing the current cost of moving a child out of the labor force and into school with a current grant” (11).

Another important detail of the research cited is its randomization. Back to our discussion on the importance of randomization, we see why the randomized research was important in targeted education subsidy findings. However, I would like to know if there were any randomized studies used to examine the effects of other methods used to thwart the facets of child labor. If we use the subsidy randomized study as the best solution, don’t we need a counterfactual for THAT…meaning other randomized studies of other methods to thwart child labor?

[Aaron DiGregorio]

Christopher Urdy begins his piece on Child Labor by bringing in the concept that when a child enters the workforce at an early age, he/she is immediately sacrificing their human capital for immediately financial gains. This is to say that by working for instant wages (typically extremely low), they are giving up their education and any real possibility for future betterment. This situation reminds me of the discussion some people in our culture have with regards to going to college or entering the workforce upon completion of High School. On the one hand, an individual stands to make thousands of dollars a year as opposed to paying thousands of dollars a year, but in the end, they are sacrificing future gains by electing to not attend college.

While in our culture the educational distance factor is often times overlooked, the marginal benefits children have in education is astronomical. Those from the poorest households, receive the largest benefit from investments in education (marginally speaking). This means that if we as a wealthier society, must invest in educational institutions within a poorer nation, if we are ever going to help them “get out of their mess”.

[Mac Keers]

The thing that I found most interesting about the article was the idea of the vicious cycle of poverty. Although this is not a new or novel idea, this articles description put it in more of a rational light. In other words, parents make the decision consciously because the cost of not having their children work is too high. In extremely impoverished areas, the cost could be death if the family is getting by on a subsistence amount of food or just a bit more. The big question then becomes, how far do families have to be away from the subsistence line to stop using their children for child labor. If they have enough money to eat but then not enough remaining to send their children to school, then they may end up working anyway since they would otherwise be wasting time. On the same token, the parents might consider that there is educational value for the future in having the child do work on the farm because it might prepare them for eventually running the farm themselves. It is difficult to even comprehend the circumstances that would lead to these kinds of judgment calls but they are obviously very dire.

If it is truly an incentive problem that is inducing child labor then effective policy might entail rewarding parents who send their kids to school. This will allow them to benefit in the short run from financial rewards and then eventually reap the benefits of their children being educated. In the poor countries where this would be necessary it would be difficult to implement this kind of policy but if it were possible it would be a big step in the right direction.