Child labour: the wealth paradox

Child labour in export industries such as carpets, clothing and sports equipment has captured public attention and stirred up a debate on trade sanctions and international labour standards. Yet obscured from the public eye, the vast majority of working children in developing countries are actually engaged in agricultural labour, predominantly on farms operated by their families. This is the conclusion of new research by Dr Sonia Bhalotra of the Department of Applied Economics at the University of Cambridge, whose findings are presented at the Royal Economic Society's annual conference this week.

"Our research on households in rural areas in Ghana and Pakistan has found that the children of land-owners are more likely to be in work than the children of poor landless households, and this paradoxical pattern is especially marked amongst girls," explains Dr Bhalotra. "This confounds the common expectation that households with more productive assets like land can afford to send their children to school rather than put them to work."

The paradox can be explained by imperfections in the markets for both labour and land. In rural areas, labour needs are seasonal and labour mobility is limited, so at busy times of the year it can be hard to find workers. Add to this the fact that family members are easier to supervise than casual workers, then it is clear that on a big farm it makes economic sense for the household to employ its children. These labour market failures are reinforced by land market failures. In a rural economy where it is difficult to buy or sell land then agricultural work experience is invaluable for those who can expect to inherit land.

The study used household survey data from the rural areas of Ghana and Pakistan to ask whether giving more land to a typical family raises or lowers child labour, when other factors like income and household size remain constant. They distinguished boys and girls in the analysis since there is considerable evidence that gender influences the level of parental investment in children.

The most striking finding is that operation of larger plots of land increases the workload of girls and reduces their school attendance but the size of plot operated has no effect on whether boys work and how much. Why is this? Although boys are more likely than girls to inherit land, they also seem to get higher monetary rewards from their education than girls. So it seems that the rewards from education outweigh the rewards from work experience for boys. Moreover, since boys rather than girls traditionally look after their parents in their old age (except, possibly, amongst the Akan in Ghana) this may motivate parents to invest more in ensuring that they grow up to be rich.

But is this good for the child? This is unclear. It depends a lot on the quality of the schools accessible to the child and the kinds of work available upon leaving school. These are weighed up against the rewards gained by working on the farm. These include not only the current increase in farm yield but also the value of the work experience gained by the child.

So what should be done? "The aim of public policy should be to expand opportunities for people and especially children," says Dr Bhalotra. "Labour markets could be greatly improved by improving roads and telecommunications in rural areas. Oddly enough, the development of land markets is closely linked to the development of a good school infrastructure: people would be more willing to buy and sell physical capital like land if they had 'human capital' (education) that they could trade in a dynamic labour market. Overall, child labour may be a parental choice and it may even be the best choice given the constraints people face. The prevalence of child labour is nevertheless a symptom of market and institutional failures that good policy should address."