How to Deal with Covert Child Labour, and Give Children an Effective Education, in a Poor Developing Country: An Optimal Taxation Problem with Moral Hazard

Alessandro Cigno

No 474, PIE/CIS Discussion Paper from Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University

Abstract: As the return to education (and possibly also parental income) is uncertain, and given that the work a child does covertly for his own parents, and transfers between parents and children, are private information, the government should make school enrollment compulsory, set a legal limit (decreasing in parental income) on overt child labour, and redistribute across families using a flat-rate education grant, and a tax on parental income. That done, it should use a scholarship increasing in school results, and a tax on the skill premium, to raise the expected return to educational investment, and make it less uncertain.

Keywords: child labour; education; uncertainty; moral hazard (search for similar items in EconPapers)
JEL-codes: D82 H21 H31 I28 J24 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2010-04
New Economics Papers: this item is included in nep-cta, nep-dev and nep-lab
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: How to Deal with Covert Child Labour, and Give Children an Effective Education, in a Poor Developing Country: An Optimal Taxation Problem with Moral Hazard (2010)
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