Child labor occurs along a continuum, with harmful and exploitative work that endangers the welfare and potential of the child at one end of the spectrum and light work and often beneficial training and apprenticeship at the other. National and international labor standard regulations with respect to what constitutes a legally permissible minimum age of employment accordingly depend typically on a range of criteria including (a) the type of work, as distinguished by the degree of hazard a child faces, or whether the child is subject to exploitation, or the worst forms of child labor; (b) the sector of employment, whether in agriculture, manufacturing, or family businesses or the household; and (c) the degree to which child labor work interferes with schooling, depending on the number of hours a child is put to work, say, per week.

Though child labor statistics inevitably paint an aggregate picture, the coverage of national and international statistics has improved, reflecting a diversity of activities that come under the umbrella of child labor work. International Labour Organization (ILO) statistics treat any child as economically active with performance of at least 1 hour of work during the week prior to a survey. The ILO also defines a child laborer as synonymous with (a) an economically active person between the ages of 5 and 11, and (b) an individual between the ages of 12 and 14 who performs 14 or more hours of nonhazardous work per week or 1 hour of hazardous work per week. Based on these definitions, over 200 million children between the ages of 5 and 14 are economically active worldwide, and of these, 186 million are child laborers. In addition, nearly 6 million children are in forced or bonded labor, 1.8 million in prostitution, and 0.3 million in armed conflict.

The absolute incidence of child labor is the highest in Asia (excluding Japan), which hosts around 127 million economically active children, followed by Africa and the Middle East (61 million) and Latin America (17 million). Increasingly, child labor occurs in southern Europe and in the transitional economies of central and eastern Europe. The participation rate of child labor is highest in Africa, where approximately one out of every three children (29 percent) is economically active. In Asia and in Latin America, the figures stand at 19 percent and 16 percent, respectively. Taken together, however, these contemporary statistics still fall short compared with the incidence of child labor in 19th-century, newly industrializing countries, including Britain, France, Belgium, western parts of Prussia, and the United States.

Poverty has been a central theme in child labor research. Income from child labor often constitutes a significant part of household income in poor households, yet child labor employment can also depress adult wages. Left unchecked, a vicious cycle of poverty may ensue in which low adult wages become both the cause and the effect of child labor employment. A related concern is the impact of child labor on fertility decisions. The lack of education as a child, low adult income, and a desire to ensure old age consumption can bias household decisions in favor of an increase in the quantity of children rather than the quality of children through education. A similar vicious cycle of poverty and child labor can likewise ensue, as underinvestment in education in one generation begets underinvestment in the next.

Other pertinent determinants of child labor include (a) credit market failures in the financing of education, (b) the lack of consumption smoothing mechanisms in the face of income uncertainty and seasonal employment, (c) coordination failures on the part of households to bargain for higher wages, (d) failures on the part of households and firms to coordinate education and technology adoption decisions, (e) lack of access to quality education, (f) social stigma and norms, with respect to child labor employment and female schooling, (g) birth order effects, (h) family migration and dislocation from family networks, and (i) low female educational attainment.

In addition to these household-level determinants, a burgeoning literature examines the link between economy-wide factors and child labor. These include ineffective enforcement of legislation to combat child labor, particularly in informal sectors and rural areas; inequality in the distribution of income; trade liberalization; an economy's dependence on agriculture; and political economy considerations.

Running parallel to these correlates of child labor are international and national policy responses to combat child labor employment. With widespread acknowledgment that poverty is a primary cause of child labor, poverty alleviation and policies promoting adult income naturally rank foremost among efforts to eradicate child labor. Beyond these arguably longer-range policy responses, which target child labor by directly addressing the root of the problem through supply side intervention, governments have also implemented a variety of national-level efforts. These efforts fall into three categories: outcome-oriented legislations, market imperfection targeting policies, and market-based, demand-oriented policies.

Outcome-oriented legislations typically come in the form of a direct ban on child labor or through minimum age employment legislation. International labor standard conventions such as the Minimum Wage Convention and the Worst Form of Child Labor Convention of the ILO also fall under this category. While virtually all countries adopt one or more of these interventions in one form or another, their effectiveness is questionable. This results, in part, from the inherent difficulty of enforcement, particularly in the areas of rural employment, the informal sector, and family unpaid work. In addition, because legislation alone does not address the source of the child labor problem, wholesale implementation of child labor laws can result instead in the displacement of child labor from one sector to the next, where the prospects of effective inspection and enforcement are even more daunting.

Market imperfection targeting policies, in contrast, operate by addressing one or more of the market imperfections that make otherwise "voluntary" child labor employment excessive. Examples of such policies include cash or food for school programs, in which credit market constraints can arguably be relieved by providing families with financial incentives to send children to school. Public employment programs such as rural public works and employment guarantee programs provide public employment as an alternative income source and consumption smoothing mechanism. A new line of research addresses policy measures in the presence of the worst forms of child labor, such as debt bondage, trafficking, and child labor in exploitative work and hazardous conditions. A central theme emerging from this growing literature is that piecemeal policy reforms, without due regard to the precise list of market imperfections that give rise to child labor of the worst forms, can have detrimental consequences for children's welfare.

A third class of policies, and highly controversial of late, aims at combating child labor by impacting final consumer demand. These policies come in a variety of forms and include mandatory trade sanctions on products made with child labor, along with voluntary and industry-based initiatives and labeling schemes that inform consumers about the social conditions under which products are manufactured. These initiatives affect final demand either directly, through a selective import tax, or indirectly, by allowing consumers to price discriminate between products made with or without child labor through appropriate product labeling. These are alternatives to trade sanctions, which some fear could ultimately adversely affect the welfare of children. Meanwhile, voluntary market-based labeling schemes may suffer from credibility problems in the absence of third-party enforcement. In the end, the precise nature of consumers' willingness to pay for higher social and labor standards is nuanced, and its ultimate impact on the welfare of the child depends on whether labeling standards are fine-tuned to benefit the welfare of children or to maximize sales.

Bibliography:

1) Basu, Arnab K. and Nancy H. Chau. 2004. "Exploitation of  Child Labor and the Dynamics of Debt Bondage."  Journal of Economic Growth 9:209-38.

2) Brown, Drusilla, Alan Deardorff, and Robert Stern. 2003.  "Child Labor: Theory, Evidence and Policy." Pp. 195-247  in International Labor Standards: History, Theories and  Policy, edited by K. Basu, H. Horn, L. Roman, and  J. Shapiro. Malden, MA: Blackwell.

3) Dessy, Sylvain E. and Stephane Pallage. 2001. "Child Labor  and Coordination Failures." Journal of Development  Economics 65(2):469-76.

4) Edmonds, Eric V. and Nina Pavcnik. 2005. "Child Labor in  the Global Economy." Journal of Economic Perspectives  18(1):199-220.

5) Grote, Ulrike, Arnab Basu, and Diana Weinhold. 1998. Child  Labor and the International Policy Debate: The Education- Child Labor Trade-off and the Consequences of Trade  Sanctions. Working Paper No 1. Center for Development  Research (ZEF), University of Bonn, Germany.

6) Ray, Ranjan. 2000. "Child Labor, Child Schooling and Their  Interaction with Adult Labor: Empirical Evidence for  Peru and Pakistan." World Bank Economic Review  14(2):347-67.

7) Swinnerton, Kenneth A. and Carol Ann Rogers. 1999. "The  Economics of Child Labor: Comment." American  Economic Review 89(5):1382-85.

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