280 Paper for Thursday

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

 

 

Comments

[Alexandra Butler]

This article was very different from most literature I have read about child labor. Usually, discussion of child labor focuses on sweatshops or sexual slavery. However, Udry discusses child labor in a very rational, economic way. Most child labor in developing countries happens on family farms, not in factories as we may often imagine. According to Udry, child labor is a tradeoff between the costs of education now and future benefits of education later. Sending a child to school means giving up current resources. Poor families often cannot afford to send children to school and forgo the extra labor, especially when the poor families experience unexpected “shocks” like famine or floods.

I must say that I am somewhat turned off by this very rational approach to child labor. Discussing child labor in terms of incomplete financial systems or household utility maximization is difficult, because child labor is a serious issue. If children cannot attend school, they are sacrificing a future that would help them escape poverty. Not to mention, it is overall just hard to think of letting children be overworked as a rational choice for a family, even though they do have limited options.

Udry also suggests a simple solution to this problem: provide subsidies to families in poverty who have children enrolled in school so that they do not lose out on current resources by funding education. However, this stance reminded me of Rodrik’s paper and his Martian Experiment. I think that in this case, context matters. Providing subsidies seems like a generalized solution to the huge problem that is child labor. Other factors like cultural traditions, social norms, or quality of education may make subsidies ineffective in promoting education and reducing child labor. For instance, if quality of education is bad, will a subsidy truly help to alleviate the problem? According to Udry’s cost-benefit analysis, it would be more economical for poor families to put children to work rather than fund a low quality education. While this paper offers a different perspective on why child labor exists, I think it is a very simplified approach and that more growth diagnostics (like those used by Rodrik) should be considered to create better, more contextual policy fixes.

[Samantha Smith]

I agree with Alexandra that it is harsh to be shown child labor in a more rational light, but I do think that the author fairly addresses the evils of child labor in the introduction. I think that Udry understands the evils of child labor, but because of the nature of economics and the piece, takes a more rational approach to child labor in order to show the reader a rational proposed solution to the problem rather than an emotional response. In 398 we discussed marketing and how you are supposed to ask for a fee or donation at the ultimate height of emotion in order to get the required response (any sort of payment). I think that as an economist Udry understands this “marketing” concept and understands that policy makers care more about the bottom line than they do their emotions. This might be a bit of a stretch, but I do think that Udry is sympathetic to the cause of child labor, but wants to take a different approach in addressing the problem. Udry understands and has to help the reader understand that families who have children in the work force aren’t evil and aren’t bad parents, but rather impoverished and faced with only one option, which is to send their children to work rather than to school. With an unemotional argument and a “simple” economic solution, child labor becomes less of a debated topic and more of a “typical” (very complex) development issue simplified. As in all economics, sometimes it is easier to understand the problem and the solution when it is overly simplified. This view of child labor and the proposed subsidy is a simple, yet strong foundation to addressing the problem.

[Juan Cruz Mayol]

As Alexandra, I was surprised by Udry's approach to child labor. He finds an explanation to child labor using economic jargon, when it seems that there is not much reasoning when this happens, and it is more a desperate measure than an economic decision.
His solution of the subsidies appears to be a flawless solution due to the way he presents it, but there are some problems associated with it (or at least the way it is done in Argentina, where nothing seems to work). Subsidies to families with children designed to stop child labor and encourage school attendance started about 10 years ago. The project had some success, but it had some colateral effects like the increase in child birth in lower income families. In these families, parents stopped working since the money they got from the subsidy to their 5-10 kids was enough for subsistence. Another problem with the subsidies is that trouble making kids started to attend school, affecting negatively the rest of the students in the classrooms. School is not beneficial for the trouble making kids either since they get to pass their classes after threatening teachers. Finally, it is hard for the government to enforce the policy of school attendance to receive the subsidy, since they can only see if they are enrolled; keeping track of millions of kids is hard and costly if done efficiently. Although there are may successful cases, and if few changes are made this program to be more effective, these 'solution' ended up subsidizing whole families to stay unemployed and uneducated.

[Lucy Ortiz]

After reading this article, two main thoughts stuck out to me. The first, was a continuation of our discussion in 398 today. Udry discusses the decision to have your children work in a very neoclassical "rational" way. It made me wonder how his straightforward decision making model would change if we added the affects of emotion, mood, and stress into it. While poor families report happiness levels equal to those of higher income, they also report much higher stress levels. Does Udry take these differing stress levels into account when discussing the future discount rates these families might calculate? Although Udry does a good job laying out a basic model that a family might follow when making these important decisions its still important to realize that its just that, a very very simplified model.

On a completely different note, the discussion of how to get students enrolled in school brought to mind an article that I read recently in which students in Pakistan were simply given report cards with both their test scores, as well as the average of their school compared to other nearby schools. Not only did this simple thing increase enrollment significantly, it also brought up the quality of the schools in the areas. As the community was able to see the average academic achievement of the various schools, it worked to hold the schools accountable. Some of the weaker schools took steps to increase the quality and decrease costs, and some of the private schools at least were forced out of business as parents had the ability to send their students to higher quality schools. I just thought that it was a good example of, as many of our authors advocate for, a simple solution to a big problem.

http://www.povertyactionlab.org/publication/report-cards-impact-providing-school-and-child-test-scores-educational-markets

[Jean Turlington]

Child Labor is definitely a huge concern that should be addressed. As people mentioned before it is tough to see how child labor shown in that rational light. We generally think of child labor in the humanitarian sense, and that it is just "wrong." It can be more complicated than that though. Families have tough decisions to make when they decide whether to send their children to work or not, and we think that children should essentially always go to school rather than work, but when it comes to feeding the family or going to school, that becomes a harder decision. In the long run the investment in human capital is probably greater but in the short run there are consequences. I also thought it was an interesting point that if the children are not really becoming more productive as a result of schooling and could make a similar impact without the extra schooling, sometimes it is better to have that child enter the workforce and maybe save some of that money for future investments. It is a thought provoking idea.

In my freshman year spring term class we did a study of corporate social responsibility in Denmark and also visited Copenhagen. A few of the companies that we studied took an interesting stance on child labor. They argued that they used child labor in a few select reasons. Those reasons were if families were going to be worse off without child labor or towns were going to be worse off without child labor, then they would allow or utilize child labor. I think they had specific instructions about how this child labor would be implemented and would make sure that the child was not overworked, but I think this is an interesting proposition. I tried to look online to see if these policies were still in practice and it looked like a few of them had been amended to say that they did not support any child labor. Maybe these companies looked at the long term effects as well as the short term and changed their decisions, but either way I think child labor that is detrimental to the development of children’s human capital should be prevented.

[Daphine Mugayo]

Its interesting that we spoke about this aspect at the very beginning of this class noting the rationality of poor families sending their children to work rather than to school. Udry presents the rationality of the choices we spoke of in poor countries citing the lack of financial markets as a key issue that results in levels of child labor that are higher than the socially efficient levels. Like many other chapters, financial markets have been presented as a potential solution, and this begs the question of why these markets have not been developed all these years.It seems like the MSB are far greater than MSC of establishing financial markets in developing countries.

I like that Udry proposes subsiding families sending children to school. Its a plausible solution but my big question is where would these funds come from in developing countries? Especially considering that these are often rural populations, this would mean reallocation of funds from urban areas to rural areas which would receive protest from urban tax payers.
Most of the studies done with such policies are done on a smaller scale, making them more affordable. Additionally, the funding comes from foreign sources which could result in dependency. I guess the potential issue is that is subsidizing schooling a sustainable mechanism? Could the government take on such a policy on a large project considering the vast majority of the population in developing countries lives under high poverty conditions?

[Kate LeMasters]

Daphine raises a concrete question that gets at what a few other people termed as Udry’s lack of context and localization: where will the money for these subsidies come from? By applying a blanket approach of subsidies, he not only ignores social context but also political and economic feasibility.
It’s useful to look at subsidies for education in the context of Tuesday’s discussion on urbanization and decentralization. Many claim that decentralization is a panacea, but, as we all know, that is not the case when governments are corrupt, local resources lacking in funding and human capital, etc. I think it’s interesting to look at Udry’s solution in the specific context of slums in these urban, decentralized areas. Many slums have been annexed as their own towns. So, there is no mechanism to give out subsidies for education when the slums lack the finances. Additionally, even if there were, quality of schools is likely very low in the slums, if existent at all, as many houses are illegally built, so there may be a skewed view of the actual child population in the area. Thus, while subsidies do provide part of the solution, they only do so in specific contexts.
It is also important to remember that the long term benefits from subsidies for education do not come for decades later, so we have not yet seen a subsidized school program come full circle. While most (including myself) remain optimistic about the effectiveness of such programs, we cannot yet claim that they have been a large success.
A final point that Udry makes that struck me was his notion of agency, a topic most people haven not touched on. The costs and benefits of child’s labor versus education are felt by different parties, with families experiencing benefits, children experiencing costs, and parents making the decisions. Here, the ethical argument is more obvious, as we discussed on the first day of class. Amartya Sen and Martha Nussbaum both write on different facets of the capability approach, which states that all people deserve to be given the capabilities to choose their functions, true freedom. Nussbaum specifically talks about agency, as each person deserves the respect of his/her society to be given capabilities. But, if parents are making these decisions that reflect the long-term well-being of their children, do the kids have capability in the first place? If not, should they and how do we change that? Again, not exactly quantifiable but something important to think about as we consider child labor and the capabilities framework.

[Jacob Strauss]

The paper states that child labor is "overwhelmingly a rural and agricultural phenomenon" and that the majority of child laborers are in Asia, which doesn't quite fit with the typical image we might think of, such as a child laborer in an Asian country. Indeed, the paper never mentions factories or sweatshops and does not list the number of children engaged in agricultural labor as opposed to industrial labor, which is most commonly associated with South and South East Asia. Furthermore, the solutions to the problem listed at the end of the paper (subsidies or other methods to encourage kids to attend school) would not work for children engaged in industrial labor. An agricultural job can be done on a day-to-day basis depending on when labor is needed or extra wages are needed, but an industrial position in a factory or sweatshop requires long term commitment, especially in China. I would postulate that schooling is essentially nonexistent for Chinese children employed in factories producing goods for your local wal-mart, and I wonder what the solution to that problem is because incentives based on education would not work in China. Recent articles on factory collapses in Bangladesh and India also show child labor is a wide spread problem in the manufacturing sector. Child labor is banned in most of these countries but the laws aren't enforced because of apathy, bribes, etc. It's encouraging to see there are solutions for child labor in the agricultural sector, but the consequences to the child working in the sweatshop are typically greater in terms of health and education, and I am disappointed the paper never discussed those aspects. It may be a less widespread phenomenon, but it also seems to be the more difficult one to fix.

[Bennett Henson]

Udry paints a picture of child labor that is less stark than most, but just as pressing. Instead of focusing on the harsher forms that "amount to direct abuse" such as sex slavery, forced labor, and dangerous factories, Udry's focus is the more common and accepted form of child labor, children working on family owned farms. As Udry explains, it is important for a child to work some, he deems it an important part of a child's upbrining, but the problem lies in the fact that children are working at a rate which comprimises their education.

The benefit of child labor is immediate: a family will have a larger income and thus be able to feed, clothe and shelter themselves. The cost, however, is only realized in the future. If a child is working and not obtaining an education, their future income will be less and society will be worse off due to the social benefits that arise through an educated population. As Udry explains, with well functioning financial markets a family would be able to take out a loan in order to pay for their children's education, but these markets are few and far between. The parents are the ones making the decision about the child's education, and since the costs are far in the future, these children end up working.

Poorly educated children become poorly educated adults who make low wages and need to have their children assist on the farm. Child labor is a cause and consequence of poverty, thus the vicious cycle continues. In order to break free from this downward sloping trend families must be incentivized to send their children to school. Mexico's "Oportunidades" is doing just that. By subsidizing child education through grants gifted to children's mother, children stay in school 2/3 of a year longer on average, resulting in a drop off in child labor. The success of this program has prompted other countries, such as Nicaragua, to follow suit. Hopefully this trend continues and other countries follow suit, if not for the humanitarian aspect then at least for the economic benefit.

[Zach Colby]

As many above have stated, this article talks about child labor in a light that it is not often painted in in popular culture or media. The rural farm based labor is the biggest scale on which the problem exists though. This article reminded me of a discussion we had earlier in the year and a point that Bennett brings up. Families have their children work because they immediately benefit from it, whether that be through wages or productivity on a subsistence farm. Perhaps the solution here is to have all these farmers take Micro Theory and learn about present and future value decisions. More seriously, I think subsidization is a feasible and probably the most applicable solution. Bennett gave another good example here. I had not heard of Mexico's "Oportunidades" before this reading, but it sounds as if it is a pretty successful program and a great real life example of Udry's proposed solution. Many people above have talked about the impracticality or unsuccessfulness of subsidies in developing nations, but I think that it theoretically is the best solution and that people should not be letting the perfect get in the way of the good.

[Austin Hay]

Early on in the paper the author discusses the caveat to the assumption that an increase in wages leads to a reduction in child labor. I think an important reason why this assumption is wrong is that the marginal benefit of a dollar to these poor households is huge. So when, as he mentions, coffee prices rise in Brazil school attendance drops. The coffee prices won’t stay high for an extended period of time so it becomes even more imperative that the child stays to work to earn money at a faster rate. It’s the equivalent to working overtime at time and a half your regular wage. One is more likely to work an extra three hours if the pay is temporarily increased; likewise, the poor families want to take advantage of an increase in product prices while they are available.

As he states the seemingly ‘obvious’ responses to this problem can be incredibly detrimental to the household. The household depends on the labor and wages brought in by the children so to ban it, in one way or another, would simply drive the family to an even worse level of impoverishment. The food for education initiative he discusses is a great example of an incentive based program that allows the family to realize some of the benefits of schooling in the present time. The parents are given an incentive to push their children to attend school and if this incentive outweighs the child’s potential labor and wages there’s no reason to believe it wouldn’t work. I’d be interested to see what the ‘price’ actually is to make this incentive equal to the wages and labor of the child. Once that is measured I think the search for funding could ensue.

[Callie Northrop]

Looking at child labor through the lenses of a well-educated American who grew up in a privileged society, it is easy for me to look at child labor as inherently wrong. I am disgusted by any parent who would ever force his or her child to work instead of allowing the child to purse an education. However, reading this article, as many have pointed out, highlights the rationality behind these parents’ decisions. It is impossible for us to judge these people for using their children for labor when, in many cases, their work will provide money that is needed to get by day to day. It is especially difficult to understand when, as the author mentions, the benefits of labor in the short term significantly outweigh the costs of it.
I was particularly interested in the section of the paper discussing the “income effect” and the “substitution effect”. The income effect seems to be fairly logical at first glance; when household incomes rise, children work less and go to school more. However, I had never thought about the idea that with the increase in wages comes the increase in the child’s wages, making this “simple” decision of sending the child to school much less simple. The substitution effect then comes into play. I would have never considered that a growing economy and rising wages would not immediately decrease child labor. This helped me to put into perspective what a complicated issue child labor is in many places.

[Madison Smith]

Something that I have been thinking about a lot since returning from Vietnam is whether or not schooling inherently has as much value as we put on it, when looking through the lens of other countries and other economies. While I obviously don’t advocate that kids should be working instead of going to school, I do think it is very important to realize that in certain economies the schooling that we are used to aren’t as helpful for the real world. For example, if you are living in a small village that is primarily agriculturally based, a parent may not see the benefit of putting their kids in school through high school if they are not learning skills that will help on the farm. They may especially not see the benefit if they are paying for the child to go to school. I think it is important to think about putting those sorts of incentives in to schools in order to help in the decision process of going to school or putting your child to work. Things like meals at school, and schools with no fees would be ways of potentially increasing the incentive to schooling rather than work. Udry gives some other examples of ways to encourage schooling. I would be interested to see the outcomes of the students versus the kids who didn’t receive the subsidy. I would want to know the differences in income/job opportunities for the kids who finished school and for those that didn't.
Udry’s point about looking at more than just the monetary costs and benefits that could explain the correlation between low-income and high incidence of child labor was very informative. As we have seen in a lot of the other articles, people use their imperfect information to make decisions and in the case of whether to put your child in school or not, it is the same sort of idea. One small point is that I think it is important to note that uneducated parents place more value on education than sometimes people immediately assume, but the issue is that they aren’t as good at deciphering between high and low quality schools. Udry argues that educated parents might value education more, but I don’t think that is always necessarily the case.

[Chandler Moody]

Like Callie, Udry's comparison of the income effect and the substitution effect stood out to me in this paper. It had never occurred to me before that increased wages could lead to increased child labor, however, after reading this paper I see that it makes sense. The higher wage a child can make working, the greater the opportunity cost of attending school. This paradox of raising wages correlating to increased child labor reminded me of the paradox of decreasing unemployment in cities that we talked about on Tuesday. If more jobs are created in cities to decrease unemployment, this can act to increase the rate of unemployment because for every one person that gets a job, 3 people move to the city thinking that they also will be able to get a job. These examples of paradoxes are a reminder that although we might predict a solution to a problem, it's important to look at the real outcomes and see what actually happens. This is something that Duflo would agree with, as it relates to her empirical economic research.
The paper presented subsidies for school attendance, especially the Opportunidades program in Mexico, as the most promising solution to ending child labor. I was very interested in reading Juan's comment above about the negative side effects of the program- poor families have more children in order to receive more subsidies, trouble makers go to school and disrupt the other students' studies, and the government can't regulate who actually attends. Reading these comments from Juan, it seems like Udry oversimplified the solution in his paper by not addressing the downfalls of the program. As a whole, I thought the paper focused too much on explaining the patterns of child labor and not explaining solutions in depth. He spent a lot of time explaining patterns of child labor, some of which was pretty obvious. That child labor is a vicious cycle causing a "poverty trap" is not a very difficult concept to understand, and I would've liked if the author spent more time on his last section about policy solutions.
Finally, something in this paper reminded me of a paper my Health Economics in Developing Countries class read with Professor Blunch. The paper was not related to child labor, but it was related to education and a cost benefit analysis of education in developing countries, which I think relates to the cost-benefit analysis of education in this paper. Udry mentions in his paper that keeping children in school ultimately benefits their health because they are more educated. In the paper we read in Professor Blunch's course last year, it did a CBA of night classes for women in Africa. The benefits of a short, night class far outweighed the cost. Benefits included better education and health for the woman as well as her children. Costs were extremely low since the women did not forgo any work to go to the classes, because they were at night. Because Udry talks about agricultural child labors, it seems like night classes or school could be an option, since more farm work is done in the daylight. This, however would not eradicate the problem of child labor and the dangerous conditions or harms it can have on the child. This is a more emotional side of the argument which Udry seems to stay away from in his analysis.

[C Wood]

While some of the first comments indicated displeasure at the approach taken by Udry to analyze child labor, I actually found the article very different than I expected, but in a thought provoking way. I expected the focus of the article to be why child labor is so detrimental and how helping change it will be beneficial. In reality the isolation of just the decision making as an economic cost benefit analysis by parents was actually helpful in understanding (as we talked about on the first day of class), that families tend to make rational decisions. This is supported by the effectiveness of many of the projects cited such as Food-For-Children that moved primary school enrollment from approximately 75 to 90%. In this article Udry isolates the cost-benefit analysis to explain the constant theme that based on conditions and knowledge that families have, they do in fact act with reason and using this knowledge enables us to implement sound policies.

I don't think anyone has really commented on part of the article that Udry isolates that I had not previously taken into consideration. This topic is leaving a bequest. Before reading I understood that parents under desperate measures pull their kids out of school which leads those kids' future incomes to be lower (and the poverty trap). However, I never analyzed this from the perspective that if only there was a way to have parents alway leave a bequest proportional to how much benefit the child provided the family in monetary terms, the child would grow up to benefit from the most utility-maximizing choice made by the parents. Additionally, the possibility of saving and pulling a family out of the poverty trap over generations would be possible. This also gets rid of the issue talked about in the article referring to agency. This way the subjective decisions made by parents to pull their children out of school at least later leaves that grown child some insurance. This next generation then also hopefully will have a lower necessity to pull their children out of school and a more positive cycle could evolve. Obviously this is just the idea of making a required bequest to mitigate the effects of lost education. How to implement this in actuality is complex and as many others have pointed out, where will this money come from. The subsidies to families is a positive way to start the cycle toward more enrollment. I want to read more about the effectiveness of certain policies over others though after reading Juan's early eye opening comments about these policies in his experiences.

[Andrew Winter]

Writing a paper about child labor from an economic perspective is an inherently difficult. It is hard to fight the immediate urge to criticize all forms of child labor and take a no tolerance stance, but reality forces an economist to try and understand the costs vs. benefits of child labor. In developing nations, reality often displays that a good education comes at too much of an opportunity cost. Udry’s paper attempts to say that subsidies for school enrollment are the best way to solve child labor. Unfortunately, I also have to agree with the question raised by Daphine regarding the source of funding for these subsidies. It would be nice to provide all young children with the opportunities that many of us take for granted but accomplishing this feat is nearly impossible. It sort of reminded me of the discussion we had about charter cities in the last class. There are lots of good ideas stemming from economic development on how to enable growth across the globe but the truth is many of them make assumptions that aren’t realistic. Additionally, Alexandra brought up the issues regarding the quality of education that we talked about earlier in the semester. The opportunity cost for many of these families to send their children to school is high enough as it is. If the education they receive is such that they will end up working on the farm anyway, then it is hard to justify this action. Low income families need their child to work in order to get by from day to day. Udry gets at this when he explains how poverty and child labor are mutually reinforcing, that because a child’s parents are poor, they have to make their children work instead of receiving an education which will result in the children growing up to be poor as well. The cycle continues until an external force is added to the equation and what Udry explains is that one way to solve this is by taking the choice of educating a child out of the parent’s hands. I agree that the best way to solve the issue would be to have a set standard of high quality education that every child had easy access too, but I can’t help but feel like we’re light years from that being a realistic solution.

[Andrew Riehl]

Child labor is one of the many problems in developing countries. It is a part of the vicious cycle that occurs in impoverished countries. A child is thrust into the work force, receives very little to no education, and because of this lack of education, remains poor. The children of this person then have to continue the tradition of child labor. It can be very hard to break this streak. The statistic for children working was particularly shocking to me: over 210 million children in 2000 between the ages of 5 and 14 were working and at least half of them were working full time. This number is a lot bigger than I would have thought and shows the need to correct the problem now. I also thought the article could have mentioned some of the other risks involved with child labor besides economic problems. In my environmental studies class, we learned about child workers in West Africa that used large machetes to cut down cocoa plants for a chocolate companies. This is dangerous because in some cases, the weapons were almost as tall as the children. The children are also be influenced by older workers and start using drugs and alcohol at young age. This hurts their development as humans and therefore society as a whole in the long run.
There are many reason child laborers are forced to work. First of all, parents make them work due to financial needs. The family needs money now and it makes sense that they put their children to work because they were probably put to work as kids. These parents are also uneducated and do not understand the benefits of the long-term investment in education. They also do not understand the social benefits of the long-term investment in education. It makes sense that the long-term is not their immediate first thought though. This is why, as the article mentions, the important steps are to increase the quality of education and to subsidize for school enrollment as an article we read earlier in the year stated.

[Raymond Monasterski]

I, too, was a bit skeptical of the subsidy program that Udry presents as a solution. Udry certainly shows the positives of the subsidies in his paper, however, I feel it's about impossible for the program to not have some failures. Similar to how Udry found child labor bans to be ineffective because there would be no way to enforce it, it is also likely there are some abuses of the subsidy system, like when children don't attend school or parents choose to have more children to collect more on the subsidies. Granted, the subsidies are taken to be more effective, however, the solution seems far from perfect, perfection being elimination or near elimination of child labor. While Udry focuses less on school quality than on school attendance, I would see school quality to be more or just as important as a subsidy. If a child goes to school, forgoing a wage or receiving a lower-wage subsidy, and learns nothing, then rationally, wouldn't uneducated parents choose to have their children work for a slightly higher wage? In the end, subsidies shouldn't be the only answer. Besides their abuses, which Juan especially points out, they should at least be combined with higher school quality, so that parents can have further reason to send their children to school and children will be better equipped to make similar decisions when they are parents, as well as have the opportunity for higher earnings as a result of their education. Then again, families are not always as forward looking as these theories predict, due to reasons often referred to in previous articles such as a lack of savings and credit or insurance against future adversities.

[HeeJu Jang]

It was quite interesting to me that at one point Udry explicitly says that the optimal amount of child labor is not actually 0. His exact wordings from the paper is as follows; "...it is efficient to increase child labor and reduce schooling up to the point at which the present discounted value of future costs of additional child labor are just balanced by the current benefit to the household of that additional child labor." It may be quote like this that turned off many people above. A rational economist, Udry views the amount of child labor as an equilibrium of the benefits and cost of children's employment (discounted at present value). I was also initially a little shocked by his statement. However, I think the mindset that dictates "no children should be removed out of school in order to work" is a product of having grown up in a very advanced country.

On the other hand, It still makes me wonder if Udry is giving 'too much credits' to the parents of working children. To what degree are these parents making correct prediction about their children's foregone future earnings? To find the equilibrium between cost and benefit of child labor, they would need perfect information about the potential wage increased by education. I can't help but doubt that many of these parents would be biased when calculating children's future wage (especially if the child is a girl and lives in a culture where most women are sold into marriage). If that is the case, would that not be the problem of imperfect information leading to the wrong equilibrium?

[Taylor Theodossiou]

I agree with others who have posted that he did not address the stereotypical image of child labor. Although some people have criticized him for focusing on the issue in such a rational way I think he did this purposefully. He was not focusing on the sweatshops or sexual slavery because he attempting to address the aspect of child labor that, as Jacob pointed out is an “overwhelmingly” rural and agricultural phenomenon. This problem is much harder to address because so often it does happen on family farms and is therefor not as visible as the sweatshops or the sexual slavery. However, Udry is providing a solution that addresses this seemingly unseen type of child labor.
The idea of subsidies as a solution to the problem is an interesting one to me but I think Kate makes a good point in saying that he is ignoring not only social context but political and economic feasibility as well. He is making the assumption that the government will have the stability and the authority to be able to provide subsidies. Even if the government, or some other organization, is able to provide the subsidies there are other issues at play. While working in the Dominican Republic this summer I was conducting surveys on families who had children enrolled in the schools run by the non-profit I was working for. Many of the children did work to help support their families and were facing some of the same issues Udry addresses in his paper. However, many of the children also did not have access to good education because they were Haitian and therefore not well liked by the Dominican government. In this instance a subsidy would not help because, first, the Haitians are seen as second class citizens and would therefore never be given the subsidy, and second, because they have very little access to the public schools. Here it is the social and political contexts that are forcing poor families to chose to send their children to work rather than to school.

[Brian Lawler]

I thought Udry was very wise in including the notion of increasing the wage not affecting child labor rates early in his paper. To my knowledge he is not describing substitution and income effects as I am not sure of what kind of theoretical model he is using, however it is still a very valid point. At first glance, policy makers would see well off families sending their kids to school and impoverished families keeping their kids to work. They would then conclude that they should simply make the impoverished families more well off. The easiest way to do that is to conduct a policy that artificially raises the parents' wages.

As Udry points out though, this will likely increase child laborers wages as well. If not in the short run, then it certainly would increase in the long run. This has one of the largest policy implications in that it throws many typical poverty-alleviating solutions out the window. Thus, we need to be a little more creative in our attempts to find a way to reduce child labor rates.

[Richard Nelson]

I find it very disheartening that we still face such global child labor issues, particularly because our ignorance seems largely at fault. Udry brings up examples of scenarios where the developed world could issue trade sanctions or other penalties to discourage child labor. Up until recently, I would have been on board with this as well. This paper very clearly shows how our good intentions don’t necessarily yield the best results. Trade sanctions or banning child labor in factories, or more importantly farms, would only deepen the poverty cycle and send a detrimental shock wave through the families without access to savings or capital. Raising wages (or indirectly by raising working standards) would only further incentivize child labor as better short term benefits relative to time-value discounted future benefits. So…Udry claims that the answer is increasing the quality of schools, providing subsidies to families that send their children to school, and increasing capital access for the poor. We’ve spoken about this working, but what about healthcare in all of this? This is the part where I think his argument fell a bit short. One of the biggest “costs” affiliated with sending a child to school rather than work for the very poor is that there is no guarantee that the children will live a long, healthy life to benefit from education. I understand that Udry draws more attention to raising education quality and providing subsidies because it is relatively cheap, but basic healthcare would be as well. A similar subsidy program or sponsored health clinic would add another strong force to counter the vicious poverty cycle in many areas.

[Ferrell Carter]

While child labor is a sensitive topic, I too was intrigued by Udry’s rational approach to the issue. Going back to previous discussions we’ve had about the usefulness of economic models, Udry is able to take such a complex and ethical issue and boil it down to a pretty simple cost benefit analysis. No, it doesn’t go into the “growth diagnostics” approach as presented by Rodik, but it does create a good base foundation for analyzing child labor from an economic perspective and seeing why families make such difficult decisions. Like Udry and other classmates, I would be in favor of subsidy programs such as Opportunidades and RPS to have more presence on the global stage in order to reduce child labor. However, like Daphine and Kate pointed out, it comes down to the issue of funding. Just as families don’t consider the future value of education to outweigh the current costs of forgoing labor, developing countries without access to strong credit markets may not see the benefit of implementing poverty alleviation policies such as these in order to break out of the poverty cycle.

I also appreciated Udry’s point to distinguish between individual wills and the will of the household in his section on agency. This is something we have touched on in class with the discussion of women in poverty and how altruistic actions towards children tend to stem from the matrons of the household. A thought that crossed my mind in this reading was what would happen if you gave agency to the children? Without educational opportunities that explained the future value of education, many might choose to stay unemployed. While children hardly ever make decisions for themselves, much less the financial status of the household, it would be interested to see if policies directed at children would have an affect on the willingness of children to work. Perhaps broader educational programs that explained these costs and benefits in addition to subsidies would mitigate some of the problems faced with controlling for cultural norms and other extraneous factors that exist among countries.

[Griffin Cook]

As many other students have noted, the cold, calculating tone of the paper by regarding the merits of child labor in largely economical terms can seem very off-putting. However, I believe that Udry’s decision to focus his paper from this perspective isn’t as harsh as some may regard it. I think that almost everyone in more economically advanced countries and most people in general would agree child labor is unethical and inhumane. However, economics is not a science of morality, and my interpretation of Udry’s decision to approach the topic from this perspective is his concession that yes, child labor is bad, and while almost everyone agrees on this opinion, here are the reasons why child labor occurs and why it cannot simply be banned by nation’s governments to end the practice.

Many of the issues addressed within the paper brought me back to the Banerjee and Duflo paper. For example, one of the assumptions in the unitary household model for assessing the value of child labor is that incomes are pooled and financial decisions are made by a single person within that household. With the information from the Banerjee and Duflo paper, the theoretical present value of the additional income provided by child labor should be even less than its initial calculated value. Households in regions of extreme poverty, especially those run by men, are prone to spending on goods that do not directly improve health or human capital, and are essential luxury goods. Many patriarchal households spend a portion of their income on alcohol and tobacco. If some of the money that is being provided by child labor wages is being spent in such a manner, then the present gains from the child working in practical terms is even less.

Another point that a few other students have made is that while Udry’s suggestion of subsidies for families that keep their children in school is theoretically an effective approach, the idea that additional funding for these subsidies can simply be acquired and used for this purpose is a bit of a stretch. However, I think that Udry does not go far enough in addressing another potential solution for the cause of child labor that he raises in the paper. He mentions that one of the problems evaluating the present value of child labor compared to the losses in future vale of human capital is that it is assumed that families can borrow money to cover the losses to their present income when sending children to school. I think that an alternative solution to subsidies to reduce child labor is to simply improve credit access to the households in places with high rates of child labor. By being able to borrow money, families can increase their present consumption and also improve their health and human capital by allowing children to stop working and go to school. The redirection of funding from other sources would not be as detrimental as applying subsidies, because the loans can be repaid in the future when the children have completed their education and have higher wages as a result.

[Curtis Jay Correll]

I really liked Udry’s thorough explanation of the rationale behind child labor and why even altruistic parents can choose that. As many other students have pointed out, his analysis was very sterile, but it was in my opinion extremely effective. It gave a simple summary of the problem, why the problem exists, other complications of the problem and solutions to the problem. I really appreciated his rational approach towards reducing child labor by as much as possible instead of taking some moral stand and banning it outright, potentially causing as much harm as good. This was rooted in the idea he presented that almost all of the families who choose child labor actually need that added income. That is why the education incentive system makes so much sense. To make it economically advantageous in the short and long term to send children to school should allow us to break a vicious poverty cycle and begin a virtuous cycle of increased education and decreased poverty.