Economics of child labour

The dissertation aims to explore the supply and demand side determinant of child labour at macro, meso and micro level. At macro level it explores the effect of globalization (defined as openness to trade and inflow of foreign direct investment) and credit market imperfections on child labour. At meso level it explores the effect of labour market conditions on child labour. As the above two levels of analysis are mainly concerned with the demand for child labour, the micro level analysis explores the supply side determinant of child labour. At micro level this dissertation explores the effect of intrahousehold distribution of power on child related outcome. Specifically it explores the effect of mother’s decision making power on her child’s labour and schooling. The macro level analysis is based on cross country regression framework while meso and micro level analysis is based on the data from Pakistan. At macro level, this dissertation points out that trade openness and FDI inflow raise the standard of living in an economy thereby reducing child labour incidence. As the channel through which trade could affect child labour is by increasing income of the poor, credit market imperfection shows insignificant effect. At meso level, this dissertation points out that high adult wages in an area increase demand for child labour while presence of adult unemployed proportion in an area reduces demand for child labour. However, presence of unemployed adult in a house increases supply of child labour. Exports, on one hand, reduce supply of child labour by affecting the income of poor at macro level while on the other hand at meso level, subcontracting of production process to small informal sector increases demand for child labour. The informal sector being unprotected by law employs a high proportion of child labour. At micro level mother’s decision making power significantly decreases child labour supply and increases child schooling. The effect is significant in case of girls but not in case of boys. This study also shows that whether children work for generating income or as family helpers, mothers are equally concerned for their welfare. Their decision making power significantly reduces labour among children