The issue of child labor has become a big concern of both China and the entire international community. It is a problem faced by countries all over the world, especially in developing countries. Child labor is defined as a “laborer” who is “economically active” (Ashagrie 1993). According to some governments and international organizations, if a person works regularly to get financial gains or produces products that finally end up with sales in the markets, he is recognized as “economically active”(Basu 1999). Nowadays, many children are still working under unhygienic conditions for long hours with minimum payment. Not only have they suffered from physical torture, but also they are suffering from mental problems.
This essay is written in response to the paper by Basu. It will first discuss the theory of Basu as is put forward in his paper, which mainly concerns the two equilibriums. Following that, there will be a discussion concerning the causes why child labor is no prevalent. Subsequently, relevant evidences are listed so as to support the above mentioned theory from the aspect of poverty, financial market as well as labor market. Finally, this essay will describe the polices which should be used to protect child labor.
Based on observation of large amount of facts, Basu puts forward two hypotheses for the child labor market:
First, only when the income from other non-child labor resources is extremely low, will the family send their kids to the labor market. Namely, non-work of the children, including leisure and receiving education, is a luxury.
Second, from the aspect of company, child labor and adult labor are mutually replaceable. If the family is composed of an adult and a child and the income mainly comes from the labor work of both the adult and the child, weather the child is completely leisure or completely occupied by work, there is a minimal consumption level on which their maintenance of life is based. Once the income that the adult earns in the labor market is higher than the total sum of minimal consumption of each member in family, parents will not make their child work. On the contrary, if the income cannot meet the ends of the entire family, parents have to send their child to the labor market so as to make money.
As is shown in the above figure, when the wage equals to marginal productivity respectively, there are two equilibriums in labor market: G (good) equilibriums without child labor and B (bad) equilibriums with child labor. Then a country is in Bad Equilibrium, laws forbidding using of child labor can help the economy reach Good Equilibrium. In this condition, intervention is much more effective. Then, the model is generalized, allowing each family to have more than one child and they are able to distribute their time to leisure or work randomly. It turns out that there are still Good and Bad Equilibrium. However, the number of children will have an effect on the equilibrium as well as the results of policy intervention. If the economy is in Bad Equilibrium, the increasing of children will lead to the income decreasing of not only child but also adult. If the economy is in Good Equilibrium, the increasing of children will lead the economy to Bad Equilibrium. The theory applies to most of the developing countries. According to Basu, if the economy is trapped at point F, payment will be low and child has to work. However, if the economy is equilibrium at point E, where wages are high and children do not have to work. If the economy is at equilibrium point F, the “benign intervention” can be used. If a Walrasian description of the entire economy is applied to this model, each equilibrium will be Pareto optimal. So between the point E and F, neither Pareto dominates the other. However, working-class can enjoy better life at E. In order to testify it, suppose there is an imaginary E’, at which point the wages are the same and children work. It...