Economic Inequality and the Emergence of Child Labor Laws

51 Pages Posted: 9 Nov 2002

See all articles by Dirk Krueger

Dirk Krueger

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Jessica Tjornhom Donohue

State Street Associates

Date Written: October 2002

Abstract

This paper constructs a dynamic heterogeneous agent general equilibrium model to quantify the effects of child labor laws on human capital accumulation and the distribution of welfare. We find that the welfare consequences of a policy reform for agents depend crucially on the main source of household income. Households with large asset holdings would never support government intervention. High-wage workers benefit most from a ban on child labor, while low-wage workers benefit most from mandatory education. Utilitarian social welfare increases to a greater extent with mandatory, publicly financed education than with a child labor ban or a combination of both policies.

Keywords: Child Labor Legislation, Wealth Inequality, Transition

JEL Classification: I28, J22, D31, O10

Suggested Citation

Krueger, Dirk and Tjornhom Donohue, Jessica, Economic Inequality and the Emergence of Child Labor Laws (October 2002). Stanford Law and Economics Olin Working Paper No. 246, Available at SSRN: https://ssrn.com/abstract=344281 or http://dx.doi.org/10.2139/ssrn.344281

Dirk Krueger (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
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HOME PAGE: http://www.econ.upenn.edu/~dkrueger/

National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

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Jessica Tjornhom Donohue

State Street Associates ( email )

138 Mount Auburn Street
Cambridge, MA 02138
United States

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