How to Deal with Covert Child Labour, and Give Children an Effective Education, in a Poor Developing Country

20 Pages Posted: 25 Apr 2011  

Alessandro Cigno

Department of Economics and Management, University of Florence; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics; Centre for Household, Income, Labour and Demographic Economics (CHILD)

Abstract

As credit and insurance markets are imperfect, and given that intra-family transfers, and the way a child uses her time outside school hours, are private information, the second-best policy makes school enrollment compulsory, forces overt child labour below its efficient level (if positive), and uses a combination of need and merit based grants, financed by earmarked taxes, to relax credit constraints, redistribute and insure. Existing conditional cash transfer schemes can be made to approximate the second-best policy by incorporating these principles in some measure.

Keywords: child labour, education, uncertainty, moral hazard, optimal taxation

JEL Classification: D82, H21, H31, I28, J24

Suggested Citation

Cigno, Alessandro, How to Deal with Covert Child Labour, and Give Children an Effective Education, in a Poor Developing Country. IZA Discussion Paper No. 5663. Available at SSRN: https://ssrn.com/abstract=1820954

Alessandro Cigno (Contact Author)

Department of Economics and Management, University of Florence ( email )

Via delle Pandette 21
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Firenze, 50127
Italy
+39 055-4374491 (Phone)
+39 055-4374919 (Fax)

HOME PAGE: http://www.alessandrocigno.it/

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Centre for Household, Income, Labour and Demographic Economics (CHILD) ( email )

Turin, TO
Italy

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