Child Labor Eradication Without Tears

51 Pages Posted: 11 May 2022

See all articles by Joydeep Bhattacharya

Joydeep Bhattacharya

Iowa State University - Department of Economics

Bidisha Chakraborty

Jadavpur University

Pan Liu

affiliation not provided to SSRN

Date Written: April 1, 2022


Child labor deprives children of their childhood, compromises their schooling, and stunts
their future potential; yet, it complements family income, possibly preventing destitution.
This paper examines a dynamic laissez-faire economy in which child labor is endemic, and
studies a policy designed to eradicate child labor not via the imposition of a child-labor ban
but by creating incentives for parents who care about their kids’ education to keep them in
school voluntarily. The policy works by making tax-financed investments in school quality,
allowing parents to economize on private education-related investments in their children.
Such improvements in school quality also help to increase current levels of human capital
and incomes; they also raise future levels due to a human capital externality. These welfare
gains relative to the laissez-faire may be taxed to compensate parents for the loss of child labor
income. The transition to a long run with no child labor and no parental out-of-pocket
education-related expense may even be Pareto-improving.

Keywords: child labor, education, government policy, intergenerational transfers, Pareto improvements

JEL Classification: E24, H 31, I 38, D 64

Suggested Citation

Bhattacharya, Joydeep and Chakraborty, Bidisha and Liu, Pan, Child Labor Eradication Without Tears (April 1, 2022). Available at SSRN: or

Joydeep Bhattacharya (Contact Author)

Iowa State University - Department of Economics ( email )

260 Heady Hall
Ames, IA 50011
United States
515-294-5886 (Phone)
515-294-0221 (Fax)

Bidisha Chakraborty

Jadavpur University ( email )

188, Raja S.C. Mallick Rd, Kolkata 700032
Calcutta, West Bengal 700032

Pan Liu

affiliation not provided to SSRN

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