Child Labor, Corruption, and Development

Toshiki Miyashita (), Kohei Okada () and Kei Takakura ()
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Toshiki Miyashita: Graduate School of Economics, Osaka University
Kohei Okada: Graduate School of Economics, Osaka University
Kei Takakura: Graduate School of Economics, Osaka University

No 20-20, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: Employing an overlapping-generations model with endogenous education choice and corruption, we investigate how child labor and corruption influence human capital accumulation and development. We show that multiple steady-states exist in the economy. One steady-state has a high level of human capital, and the other has a low level of human capital. In the steady-state with a low level of human capital, child labor and corruption exist and welfare is low. In the steady-state with a high level of human capital, child labor and corruption are diminished and welfare is high. In addition, we show that it is dicult to steer an economy away from a poverty trap with child labor and corruption because bureaucrats of the current generation are opposed to policy changes such as reinforcement of monitoring and penal regulations. However, we can apply the Pareto-improving policy to this poverty trap, for e.g., the government receives funds from an international organization and distributes them among bureaucrats, which keeps them from being corrupt.

Keywords: Child labor; corruption; human capital accumulation; development (search for similar items in EconPapers)
JEL-codes: D73 E24 I25 J13 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2021-01
New Economics Papers: this item is included in nep-dge and nep-mac
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