Staff Report 354

The Macroeconomics of Child Labor Regulation

Fabrizio Zilibotti
Matthias Doepke

Published February 1, 2005

We develop a positive theory of the adoption of child labor laws. Workers who compete with children in the labor market support the introduction of a child labor ban, unless their own working children provide a large fraction of family income. Since child labor income depends on family size, fertility decisions lock agents into specific political preferences, and multiple steady states can arise. The introduction of child labor laws can be triggered by skill-biased technological change that induces parents to choose smaller families. The model replicates features of the history of the U.K. in the nineteenth century, when regulations were introduced after a period of rising wage inequality, and coincided with rapidly declining fertility rates.

Published In: American Economic Review (Vol. 95, No. 5, December 2005, pp. 1492-1524)

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