Child labor may well be morally repugnant but economists go beyond this and rationally argue for policies that will help children. Traditional arguments based on perfect competition are unhelpful and even suggest child labor may be a good thing. The argument is made persuasively in Krugman’s “In Praise of Cheap Labor”. Legislating higher wages for some group will quite likely reduce overall employment and make workers as a class worse off. Banning child labor may force children away from legitimate work to work that is off the books and not necessarily legal. Given that the sex trade is highly profitable and illegal it is easy to imagine this may well make children far worse off.
However, there is a tight rational argument provided by Kaushik Basu to support the moral indignation many of us feel. The key to the argument is the bond between parent and child. Parents will not necessarily do what is in their best interest because they are altruistic and put the interests of the children first. The second key to the argument is that as children are sent to school rather than work the wages of adults increase. These two create the potential for multiple equilibria. If all children work, then adult wages will be low and adults may well need to send the children to work to survive. However, if all children go to school then adult wages are higher and it may be that now the family can survive and send the children to school. If this is possible, it is what parents will choose because we assumed they are altruistic.
The next time when you are out on your shopping trip, chances you may have support a business that exploits children. It is very disturbing and heartbreaking to learn many children are chained to looms for 12 hours a day because families need to have their child bringing home a small amount of moneys. Child labor has always been a difficult subject to address, the topic have become much more complicated and prolific. Child Labor is not an isolated problem. The phenomenon of child labor is an effect of economic discrimination. In different parts of the world, at different stages of histories, laboring of child has been a part of economic life. More than 200 million children worldwide, some are as young as 4 and 5 years old, are slaves to the production line. These unfortunate children manufacture shoes, matches, clothing, rugs and countless other products that are flooding the American market and driving hard-working Americans out of jobs. These children worked long hours, were frequently beaten, and were paid a pittance.
How you like them Nikes now?