On the Distributional Consequences of Child Labor Legislation

31 Pages Posted: 12 Jul 2005

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

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Abstract

This article studies the effects of child labor legislation on human capital accumulation and the distribution of wealth and welfare. We calibrate our model to U.S. data circa 1880 and find that the consequences of restricting child labor or providing tax-financed education depend on the main source of individual household income. Households with significant financial assets unambiguously lose from government intervention, whereas high-wage workers benefit most from a child labor ban, and low-wage workers benefit most from free education. Introducing free education results in substantial welfare gains, whereas a child labor ban induces small welfare losses.

Suggested Citation

Krueger, Dirk and Tjornhom Donohue, Jessica, On the Distributional Consequences of Child Labor Legislation. International Economic Review, Vol. 46, No. 3, pp. 785-815, August 2005, Available at SSRN: https://ssrn.com/abstract=758064

Dirk Krueger (Contact Author)

University of Pennsylvania - Department of Economics ( email )

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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 )

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Cambridge, MA 02138
United States

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