ABSTRACT: While bans against child labor are a common policy tool, there is very little empirical evidence validating their effectiveness. In this paper, we examine the consequences of India’s landmark legislation against child labor, the Child Labor (Prohibition and Regulation) Act of 1986. Using data from employment surveys conducted before and after the ban, and using age restrictions that determined who the ban applied to, we show that child wages decrease and child labor increases after the ban. These results are consistent with a theoretical model building on the seminal work of Basu and Van (1998) and Basu (2005), where families use child labor to reach subsistence constraints and where child wages decrease in response to bans, leading poor families to utilize more child labor. The increase in child labor comes at the expense of reduced school enrollment. We also examine the effects of the ban at the household level. Using linked consumption and expenditure vdata, we find that along various margins of household expenditure, consumption, calorie intake and asset holdings, households are worse off after the ban.
JEL Codes: I38, J22, J82, O12
Check also: A Fine is a Price. Uri Gneezy & Aldo Rustichini. The Journal of Legal Studies, Volume 29, Number 1, January 2000. http://www.journals.uchicago.edu/doi/abs/10.1086/468061
Abstract: The deterrence hypothesis predicts that the introduction of a penalty that leaves everything else unchanged will reduce the occurrence of the behavior subject to the fine. We present the result of a field study in a group of day‐care centers that contradicts this prediction. Parents used to arrive late to collect their children, forcing a teacher to stay after closing time. We introduced a monetary fine for late‐coming parents. As a result, the number of late‐coming parents increased significantly. After the fine was removed no reduction occurred. We argue that penalties are usually introduced into an incomplete contract, social or private. They may change the information that agents have, and therefore the effect on behavior may be opposite of that expected. If this is true, the deterrence hypothesis loses its predictive strength, since the clause “everything else is left unchanged” might be hard to satisfy.
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In a day-care center for little children... The contract signed at the beginning of the year states that the day-care center operates between 0730 and 1600. There is no mention of what happens if parents come late to pick up their children. In particular, before the beginning of the study, there was no fine for coming late. When parents did not come on time, one of the teachers had to wait with the children concerned. Teachers would rotate in this task, which is considered part of the job of a teacher, a fact that is clearly explained when a teacher is hired. Parents rarely came after 1630. [...] At the beginning of the fifth week [of 20 weeks in the study], we introduced a fine [of little money for each child and 10 minutes delay] in six of the 10 day-care centers,7 which had been selected randomly. [...] At the beginning of the seventeenth week, the fine was removed with no explanation.
[...] Fact 1.—The effect of introducing the fine was a significant increase in the number of late-coming parents.
Fact 2.—Removing the fine did not affect the number of late-coming parents relative to the time of the fine. In particular, this number remained higher in the treatment group than in the control group.
Fact 3.—There is no significant difference in the behavior of the test group and the control group in the initial 4 weeks, and there is no significant trend in the test group.
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