Barriers to Capital Accumulation and the Incidence of Child Labor

23 Pages Posted: 3 Mar 2006

Date Written: November 2005

Abstract

The World Bank documents an inverse relationship between GDP per capita and child labor participation rates. We construct a life-cycle model with human and physical capital in which parents make a time allocation choice for their child. The model considers two features that have shown potential in explaining differences in states of development across nations. These are a minimum consumption requirement, and barriers to physical capital accumulation. We find the introduction of capital barriers alone is not enough to replicate the aforementioned observation by the World Bank. However, we find the interplay of a minimum consumption requirement and barriers to capital may enhance our understanding of child labor and the poverty of nations. Additionally, we find support for policies aimed at reducing barriers to capital accumulation as a means to reduce child labor.

Keywords: Barriers to Capital Accumulation, Child Labor

JEL Classification: O11, J2

Suggested Citation

Espinosa-Vega, Marco A., Barriers to Capital Accumulation and the Incidence of Child Labor (November 2005). IMF Working Paper No. 05/220, Available at SSRN: https://ssrn.com/abstract=888089

Marco A. Espinosa-Vega (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-8589 (Phone)
202-623-4311 (Fax)

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