Economists have developed a promising new model to explain why nations adopt child labor regulations.
The model hinges on a trade-off for parents with low work skills.
If child labor is forbidden, parental wages increase due to less competition from child workers, but families lose income earned by their children.
Higher returns to education could motivate new parents to have few children and send them to school; parents who already have children are economically locked into support for child labor. A political majority favoring restrictions will be achieved only gradually, as the numerical balance shifts toward new, smaller families.
Douglas Clement was a managing editor at the Minneapolis Fed, where he wrote about research conducted by economists and other scholars associated with the Minneapolis Fed and interviewed prominent economists.