DP5953 Origins and Consequences of Child Labour Restrictions: A Macroeconomic Perspective

Author(s): Matthias Doepke , Dirk Krueger

Publication Date: November 2006

Keyword(s): child labour , inequality , welfare , political economy

JEL(s): J40 , J82 , O11 , O40

Programme Areas: International Macroeconomics , Public Policy

Link to this Page: www.cepr.org/pubs/dps/DP5953.asp.asp

In this paper we investigate the positive and normative consequences of child-labour restrictions for economic aggregates and welfare. We argue that even though the laissez-faire equilibrium may be inefficient, there are usually better policies to cure these inefficiencies than the imposition of a child-labour ban. Given this finding, we investigate the potential political-economic reasons behind the emergence and persistence of child-labour legislation. Our investigation is based on a structural dynamic general equilibrium model that provides a coherent and uniform framework for our analysis.