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.With this assumed ordering, thechild will never engage in market work unless the parent is alreadydevoting all of its time to market work as well.But this can happen,if wages of both are low and productivity of home production iseven lower. b723_Chapter-18.qxd 7/15/2009 10:02 AM Page 730730 D.K.Brown, A.V.Deardorff & R.M.SternIn general, under the assumption in (8), the only patterns ofintra-family specialization that can be observed are those depicted inthe table below.TH LLeisure Home Production Market WorkC, P P PCP PC C,P PCC PC C C, PWhich of these patterns is chosen then depends upon all of the param-eters, including the market wage rates.For our purposes here, we care most about the implications of themodel for labor supply.There are two aspects of this that will be ofinterest: how the total labor supply of the family varies when wagesof parent and child move together; and how they vary when the wageof only one family member changes while the other is fixed.The firstcase is depicted in Figure 3.Here it is assumed that the parent s and child s wages movetogether, as they would (and will below) if the child s productivityin market work is some fixed fraction of an adult s while bothbecome more or less valuable with varying market conditions.wp(=wc/±)Lp±LcTpLSFigure 3.Family labor supply as wages vary together. b723_Chapter-18.qxd 7/15/2009 10:02 AM Page 731U.S.Trade and Other Policy Options and Programs to Deter Child Labor 731Letting ± = wC/wP wc, then the effect is extreme,since the family would never then send the child to work.Even witha smaller subsidy, however, the change in incentives can have impor-tant effects, and it seems clear that this can only reduce child labor.Furthermore, and unlike the other policies, this subsidy can only ben-efit the families, not harm them.This is true in the small, when wages are fixed by FPE, and itis equally true in the large.For once again, by reducing the supplyof child labor, the education subsidy has the potential, if usedbroadly enough, of reducing the overall supply of unskilled labor b723_Chapter-18.qxd 7/15/2009 10:02 AM Page 737U.S.Trade and Other Policy Options and Programs to Deter Child Labor 737and raising the world prices of goods these workers produce, aswell as their wage.This all sounds fine, but of course we have not accounted for thevery real cost of financing the subsidy.As usual in matters of this sort,unless there is a market failure being corrected, a subsidy will itself dis-tort markets and cause a net reduction in economic welfare.In thiscase, since the gains to the poor families of the child workers seemclear, this means that these gains are smaller than the cost of the sub-sidies.It probably would not be hard to dream up market failures tojustify this cost, but we do not view that as necessary.Redistribution ofworld income toward the poor is sufficiently difficult that one shouldnot condemn a policy like this on the grounds of a little economic inef-ficiency.On the contrary, if the world can harness the righteousindignation over child labor to the cause of truly helping these childrenand their families, the effort seems to us to be truly worthwhile.V.Conclusions and Implications for PolicyIn Section III we noted five kinds of policies and programs that havebeen suggested or used for deterring the employment of children.Weconclude by revisiting them, providing our assessment of their desir-ability from the perspectives both of our analysis in Section IV andfrom broader considerations.To avoid repetition, we address the poli-cies and programs in three groups.Trade PoliciesAs might be expected from trade economists, we have a very lowopinion of the use of trade restrictions to deter exploitation of foreignchild labor.Our objections arise only partly from the usual distortionsthat trade intervention brings about, or from our concern that thereal motivation for such policies is the protection of domestic inter-ests in the developed countries rather than the welfare of theexploited children.As usual, if such protection is the real aim of poli-cies, then there are better ways for all concerned to achieve it than byrestricting trade. b723_Chapter-18.qxd 7/15/2009 10:02 AM Page 738738 D.K.Brown, A.V.Deardorff & R.M.SternMore importantly, however, is the welfare of the exploited chil-dren themselves, and whether they are truly helped by, say, a boycottof the goods they are employed to produce.If such a boycott weretruly complete, then the effect would be that of a ban on child labor,as discussed above.Such a ban would indeed reduce the employmentof children, but except perhaps in the case of bad parents, it wouldhurt the children rather than helping them.Furthermore, if traderestrictions effect only a partial boycott being implemented by onlysome importing countries rather than all or if they merely lowerthe net prices of imported goods that continue to be produced withchild labor, then the effect will be similar to a tax on child labor thatwe also discussed.Here, as we saw, the children are hurt while theiremployment may actually rise.ILO Assistance and Other Supra-National MeasuresWe already noted with approval the funds that have been contributedby the United States and other developed countries to the ILO s IPECfor improving labor standards.These funds can be used in a variety ofways, and they are not without their pitfalls, as we have noted alongthe way.But they provide the best means we have seen for truly allevi-ating the plight of working children, and not just removing them fromview.To the extent that such funds are used to subsidize educationamong poor youth, and in particular to provide them and their fami-lies an incentive to remove them from more arduous activities, theseprograms act much like the subsidy to education that we discussedabove.The gains are clear and unambiguous, and we strongly recom-mend that such efforts be expanded.It is notable that the amount ofmoney contributed to these programs by the United States, thoughlaudable, is miniscule compared to what the U.S.contributes to manyother domestic and even international initiatives.Codes of Conduct and LabelingBoth codes of conduct and consumer labeling (which in effect simplyhelps producers to gain a marketing advantage from their codes of b723_Chapter-18.qxd 7/15/2009 10:02 AM Page 739U.S.Trade and Other Policy Options and Programs to Deter Child Labor 739conduct) are not, in our view, unambiguously desirable.To the extentthat they only reduce the demand for child labor or, equivalently, raiseits perceived cost to potential employers, these initiatives cater moreto the sensitivities of western firms and their customers than to thechildren that are said to be their focus.Indeed, simply to stopemploying an impoverished child should be viewed in many cases as agreater form of exploitation than employing them again, however,with perhaps the exception of children of bad parents in forced orbonded labor.The focus of a code of conduct and of any labeling that resultsshould not be the negative one of not employing children, but thepositive one of actually helping them
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