INEQUALITY, PRODUCTIVITY, AND CHILD LABOR: THEORY AND EVIDENCE*

We extend the “general model ” in Basu and Van (1998) to allow for different types of households, and the model in Swinnerton and Rogers (1999) to allow for a more general utility function. Our new finding is that while in higher-productivity countries with child labor, a more equal income distribution can reduce or eliminate child labor, in low-productivity countries, a more equal distribution of income can exacerbate child labor. Econometric specifications studying child labor among 10- to-14 year olds yield results broadly consistent with these predictions. This suggests that policy actions taken to reduce child labor should take into account the productivity level of the economy. JEL Classification Numbers: J13, J