Why is Child Labor Illegal?

Abstract

We argue from an empirical analysis of Latin American household surveys that per capita income in the country of residence has a negative effect on child labor supply, even after controlling for other household characteristics. We then develop a theory of the emergence of mandatory education laws. If parents are unable to commit to educating their children, child labor laws can increase the welfare of altruistic parents in an ex ante sense. The theory suggests that measures that reduce child wages can make poor families better off, but that this may come at the expense of even poorer families.