CHILD LABOR

and its

Socio-Economic
Impact

Devaangi Sharma
Niharika Bhatia

ABSTRACT
The Child is father of the Man said Wordsworth. Children begin by
loving their parents; as they grow older they judge them; sometimes
they forgive them. Mahatma Gandhi says, If we are to teach real
peace in this world, and if we are to carry on a real war against war,
we shall have to begin with the children." With increasing child labor
in India, the future of children is moving towards the darker side.

Simultaneously, there have been obvious consequences on the

society. The purpose of this paper is to provide a structured picture of
what is known and what should be known on the socio-economic
consequences of child labor. Also, our aim is to provide the bigger
picture in which child labor not only increases, but the various
challenges that have come up due to this problem. Various facts and
figures from reliable sources have been presented in certain sections.

INTRODUCTION
The Child is Father of the Man said Wordsworth. Jawaharlal Nehru
considered children as one of the greatest asset for the nation.
Generally, a child is defined using age criterion. A child as a social
being can however not be defined merely through an age criterion.
Childhood has its relevance in terms of persons social acceptance as
adults; generally by providing a space for participation in social affairs
with an autonomous identity.
According to International Labor Organization(ILO,2002 ) all children
under 15 years of age who are economically active excluding those
who are under 5 years and those between12-14 years old who spend
less than 14 hours in a week open
their jobs unless their activities or occupation are hazardous by
nature or circumstances, is called Child Labor. The International
Labor Organization (ILO) defines child labor as "work situations where
children are forced to work on a regular basis to earn a living for
themselves and their families, and as a result they remain backward
educationally and socially in a situation which is exploitative and
harmful to their health and to their physical and mental development.
The children are separated from their families, often deprived of
educational and training opportunities and they are forced to lead
prematurely adult lives (ILO).
The worst forms of child labor are those situations where children
work more than nine hours in a day; earn less than a minimum wage
or no wages at all; work in hazardous conditions for health and safety;
have no access to education; and, work outside of their family's
home. Children are the future of the nation, they are vulnerable due
to their age and physical power and they cannot make plan for their
future and cannot understand the result of any work. So they should
be protected from exploitation and should be given opportunities for
their physical and mental development. Government of India is also
committed to ensuring protection, rights and development of children
in our country to overcoming this target government has enacted
various legislations such as which prohibit children from working in

the particularly hazardous and dangerous activities Child Labor

prohibition and regulation act 1986.

CAUSES OF CHILD LABOR

Child labor is a socio-economic problem. Parents for the reason of
poverty have to send their children in order to supplement their
income derived from child labor, however meager are essential to
sustain the family. The major reason that creates the circumstances
for a child to work as a child labor includes the following.

Socio-economic backwardness
Poverty - Many a time poverty forces parents to send their
children to hazardous jobs. Although they know it is wrong, they
have no other alternative as they need the money.
Illiteracy - Illiterate parents do not realize the need for a proper
physical, emotional and cognitive development of a child. As
they are uneducated, they do not realize the importance of
education for their children.
Unemployment of adult labors - Elders often find it difficult to get
jobs. The industrialists and factory owners find it profitable to
employ children. This is so because they can pay less and
extract more work. They will also not create union problem.
Over population - Most of the Asian and African countries are
overpopulated. Due to limited resources and more mouths to
feed, Children are employed in various forms of work.
Government apathy.
Urbanization - The Industrial Revolution has its own negative
side. Many a time MNC's and export industries in the developing
world employ while workers, particularly in the garment industry.
Orphans - Children born out of wedlock, children with no parents
and relatives, often do not find anyone to support them. Thus
they are forced to work for their own living.

REAL SITUATION
The ILO estimates that the number of working children in the 5
to 14 age group in the developing countries is 250 million, of
whom at least 120 million are working full time. Of these, 61%
are in Asia, 32% in Africa and 7% are in Latin America.
According to the 1981 Census, child population (5-14 years) in
India was 179.5 million, of which the number of working children
was 13.64 million, indicating that 7.6% of the child population
were workers.
The 1991 Census indicated that 5.2% of the child population
were workers.
Child Labor has decreased from 1.25crores (Census 2001) to
90.75lacs (Census 2011) and recently to 49.6lacs. Child labor is
still a major problem in India.
The Hindi belt, including Bihar, Madhya Pradesh, Rajasthan and
Uttar Pradesh, account for 1.27crores working children in the
country, engaged in both hazardous and non-hazardous
occupations and processes.
Over 19lakhs child laborers in the 5-14 age group are in Uttar
Pradesh. Rajasthan accounts for over 12.6lacs workers followed
by Bihar with over 11lakhs and Madhya Pradesh with 10.6lacs.

ECONOMIC IMPACT OF CHILD LABOR

The economic effects of child labor can be divided into those which
occur at the micro family level, those on macro variables such as long
run growth and foreign direct investment, and the effects on labor
market. In this paper we keep to this
categorization and observe the following guidelines.
First, we disentangle the short run and the long run effects of child
labor since the consequences on some economic variables may
change over time, and we replicate the analysis for the existence of
and a decrease in child labor because the economic implications of
child labor are not automatically reversed in the case of a successful
reduction in child labor.
Second, we unravel the various forms of child labor hazardous and
non-hazardous activities, agricultural and non-agricultural work, jobs
in modern and traditional industries, economic and non-economic
activities, formal and informal economy occupations, full-time and
part-time work, wage earners and unpaid family workers, children
attending and not attending school, and younger child laborers. This
is important because the economic impacts of different forms of child
labor can be and actually are different not only in size but even in
direction. Therefore, focusing on the aggregate number of child
laborers, which is heterogeneous, is potentially misleading as regards
the study of economic relationships.
Finally, we would like to make clear that growth, being merely the rise
in per-capita income, should not be considered as the final goal of any
policy, including those aiming at reducing child labor, but rather as an
intermediate goal that may help but is not sufficient for reaching
social development. In the present work this implies that some of the
discussed economic effects of child labor (such as income and gender
inequality) are relevant to social development independent of their
effect on growth. Vice versa, the effects of child labor on growth

described below are important just to the extent that growth can lead
to social development.
Child Labor impact at the MICRO family level
-Short run effects on household income
The most obvious economic impact of child labor at the family level in
the short run is to increase household income. All researchers and
practitioners agree that poverty is the main determinant of child labor
supply, and that child labor significantly increases the income and the
probability of survival of the family. Several estimates exist of the
proportion in which children contribute to family income: for instance
Usha and Devi (1997) find a figure (on average 20%) for child
laborers from a village in Tamil Nadu (India); and Swaminathan (1998)
reports that 40% of children in her sample (Gujarat, India) contributed
between 10% and 20% to total household income. This contribution is
most of the time critical since children are sent to work when parents
earnings are insufficient to guarantee the survival of the family, or are
insecure so that child labor is used as a mean of minimizing the
impact of possible job loss, failed harvest and other shocks on the
familys income stream.
In these circumstances, the survival of the family depends on child
labor irrespective of whether it is carried out in hazardous or nonhazardous activities, in formal or informal economy, or even in paid or
unpaid family activity. This last point deserves clarification: unpaid
family workers contribute to the households income and survival by
helping their parents in both paid and self-employment activities. It is
common for families to engage in sub-contracting where the family is
paid at piece rates, so that the help of children is crucial to increase
household productivity and daily income.
If the work of children is needed for meeting the essential needs of
the family, any effort to reduce child labor (both in formal and
informal occupations) must take into account that the income of

families involved will be affected negatively, often pushed below the

survival level. Hence social security for poor families with children in
school become of crucial importance for the effectiveness of child
labor reduction programs.

- Long run effects on household poverty through human capital

Although parents may act rationally by sending their children to work
in order to increase their probability of survival, they may not
perceive the long run negative implications of child labor for their own
family. Since child labor competes with school attendance and
proficiency, children sent to work do not accumulate (or underaccumulate)human capital, missing the opportunity to enhance their
productivity and future earnings capacity. This lowers the wage of
their future families, and increases the probability of their offspring
being sent to work. In this way poverty and child labor is passed on
from generation to generation.

Child Labor impact on long run growth and development

Having discussed the short and the long run economic impact of child
labor at the family level, in the present section we analyze the effects
of child labor on long-run growth. A review of the theoretical and
empirical literature on child labor has lead us to the identification of
at least six channels through which child labor might have a negative
impact on long run growth: lower human capital accumulation, higher
fertility, worse health, slower investment and technical change,
higher income and gender inequality. It should be reminded that
some of these channels namely human capital, health and
inequality are important indicators of a countrys level of social
development. Child labor can slow down long run growth and social
development through reduced human capital accumulation. A lower
human capital accumulation also has a direct negative effect on the
level of social development. So child labor not only indirectly affects
long run growth, but also directly affects social development.
Moreover, to the extent that higher per capita incomes contribute to
social development, child labor can have an indirect effect on social
development through long run growth.
-Effects through income inequality
Child labor certainly has an impact on income inequality, but the
direction of this impact might be ambiguous and could vary in the
short and in the long run. In the short run, child labor provides poor
families with the income they need for their survival. From this point
of view, therefore, child labor lessens income inequality, by raising
the income of those at the bottom of the distribution.
On the other side, it is often argued that child labor adds to the
supply of unskilled labor, in this way depressing the wage rate of
unskilled adults.
This, of course, makes the distribution of income more unequal. The
net effect on income inequality in the short run therefore depends on
the size of the unskilled adults wage loss relative to the children wage
rate.

A different story works in the long run. As explained above, child labor
negatively affects the income of the involved families and of their
descendants through mutually reinforcing low education and high
fertility. At the same time, the scarce supply of educated labor keeps
the skilled workers wage rates at high levels. Therefore in the long
run there is no doubt that child labor worsens, or at least perpetuates,
income inequality. Income inequality, in turn, directly reduces a
countrys level of social development.

Child Labor and Globalization

Child labor emerged as a global issue when many developed
countries started fearing that exports from the developing countries,
owing their competitiveness to low labor standards, could result in
transferring jobs to the Third World. The image of multinational
corporations closing their plants in developed countries to take
advantage of low labor standards, including child labor, in developing
countries has been often depicted. Put in economic terms, the worry
arises from the fact that the exploitation of children in many
developing countries can artificially depress the cost of labor, leading
to unfair competitive advantage in world markets and to a
downward pressure on unskilled workers wages and employment in
rich countries.
Globalization might give developing countries the opportunity to
increase their gross domestic product (GDP) per capita via new trade
possibilities and ascending foreign direct investment (FDI) inflows.
Yet, the increase in GDP per capita entails an increase in child labor
employment. But on the other hand, globalization might enforce
developing countries which have less stringent labor market laws and
regulations compared with the developed countries to transfer and
adopt the stricter standards and regulations of developed countries.
Next to those assumptions, it might also be supposed that developed
countries transfer their labor intensive industries to the labor
abundant developing countries in order to benefit from lower labor
costs. In that sense, developing countries might enjoy the
comparative advantage of their child labor abundance.

Child Labor Impact on Adult Unemployment or Wage Rate

The idea that child labor might depress adult wages is strictly linked
to the idea that child labor creates adult unemployment. If children
enter the labor market and have a lower reservation wage the
argument reasons either they displace adults from their jobs,
creating adult unemployment, or they lower the adult wage rate. Both
outcomes are subject to the condition of children being substitutes for
adults (and vice versa), whose validity has been discussed in the
previous section.
Here we shall examine in which circumstances we would expect
higher adult unemployment to be more likely than lower adult wages.
First of all it should be clarified that the following analysis applies to
any two subgroups of workers that can be considered substitutes for
one another and who actually compete for the same jobs. Based on
the evidence that child labor is essentially unskilled, the relevant
subgroups here are children and unskilled adult workers.
Graph 1 represents a hypothetical labor market for unskilled adults,
showing their share into the labor force on the horizontal axis and
their wage rate relative to the economys average wage rate on the
vertical axis. For the time being assume that the average wage rate
in the economy is constant, and that labor supply and demand have
the standard upward sloping and downward sloping shapes
respectively.

Suppose that an exogenous increase in the relative number of

children in labor force (or an exogenous decrease in childrens relative
wage rate) takes place, and that this change reduces the labor
demand for unskilled adults at any given relative wage. In graph 1
this is represented by the labor demand shifting to the left (from D to
D).
So far we have assumed an upward sloping labor supply. However,
the impact of child labor on the unskilled adults labor market actually
depends on the slope of the labor supply. If the supply of unskilled
adults is infinitely elastic (graph 2A) the shift in labor demand will
cause a fall
in the relative employment of unskilled adults leaving their relative
wage rate unchanged.
Alternatively, if the labor supply of unskilled adults is perfectly
inelastic (graph 2B) the shift in labor demand can produce a fall in

unskilled adults relative wage rate with no change in their relative

employment level.

Similarly a reduction in relative child labor supply (in case of an

efficient ban on child labor or compulsory education law) or an
increase in children relative wage rate (in case of a social protection
law) by shifting labor demand for unskilled adults upwards, would
lead to an increase in the unskilled adults relative wage while leaving
their relative employment unchanged in case of flexible wages (from
B to A in graph 2b). On the other hand, if adult wages are pinned
down to a minimum and there is initial unemployment (as in point C
of graph 2B), a reduction in child labor might create adult
employment without affecting adult wages (from C to A).
It might be useful to recall that the previous statements refer only to
child laborers competing with unskilled adults in paid activities48. In
the case where children and adults are complements rather than
substitutes the effect is the opposite (more child labor inducing more
adult employment and/or higher adult wages). Moreover, children
who work unpaid in household enterprises or in domestic services
have no effect on adult wages or employment level. Finally two
already mentioned warnings apply: first, banning child labor from
certain industrial activities might just push children into worse forms

of child labor; and second, increasing the wage rate of children might
simply push out of business many poor employers causing a dead
loss of income and employment.

LEGISLATIVE PROVISIONS FOR PROTECTION OF

CHILD LABOR

The Factories Act of (1881) was the first law to define child and to
prescribe prohibitory regulations for employment of children below 7
years of age.
The Factories Act, (1911) prohibited employment of children in
dangerous occupations and working during night hours.
The first Convention of ILO, compelled amendment of the Act in
(1922), to rise the minimum age of child to 15 years. However,
children below the age of 12 years where prohibited for employment.
The age rose to 13 years in 1935 under the Act.
The Factories Act, (1948), prescribes prohibitory regulations for
employment of children below 14 years of age in any factory.
India Mines Act, (1952) prohibits employment of children below 16
years in any underground mines.
Plantation Labor Act, (1951) prohibit the employment less than age of
12 years.
Protection of children from sexual offence Act, 2012, has several
features that are child centered.
The Motor Transport Workers Act (1961) absolutely prohibits
employment of children in motor transport.
The Shops and Commercial Establishments Acts of different States,
also prohibit employment of children in the shops hotels, dhabas,
street shops and commercial places.
Those young persons who are employed, these legislations are careful
about their health. While restricting the night work, they provides for

medical fitness certificates by the young persons. Also, the parents

who satisfy their economic needs lie about the age of their children.
The Child Labor (Prohibition and Regulation) Act was enacted in 1986.
The Act prohibited employment of children below the age of 14 years
in certain occupations and processes. These include the transport of
passengers, goods and mails and other hazardous work in railways
and ports, the process like Beedi making, cement manufacturing,
manufacturing of matches and explosives, mica cutting, soap
manufacturing, wool cleaning and building and construction
industries. The 3rd part of the Act provides for regulations of
conditions of work by prescribing minimum working hours, prohibiting
work at night, prohibiting overtime work, and weekly holiday. Also,
the Act provides measures for health and safety of child workers. It
emphasized on maintenance of a register having details of children if
employed by any organization. While prohibiting employment in
certain occupation and processes, the law legalized employment of
children in other cases. Indirect support was extended for such an evil
practice which should be totally prohibited irrespective of the nature
of employment

CONCLUSION
Child labor is a national shame and one of the forgotten issues of our
country. Undoubtedly, poverty is one among other on the seed bed
for child labor and enhances problem greatly. It is the socially and
economically deprived section of the population who are working.
Hence enforcement alone cannot help to solve it. Thrust area is
Rehabilitation of these children and on improving the economic
conditions of their families. Ample of grounds come to the research
but it is usually two in our view; that is one, a concern for the poor
households that depends on the earnings of the child workers and
secondly, the inability to enforce a ban on child labor in a situation of
poverty.
The health conditions that have a deleterious impact on their physical
ability and development, multiple remedies need to be adopted. The
law must be enforced stringently, with strong mechanism for
inspection and prosecution against the daredevils. Rescued children
need speed educational intervention to prepare them for regular
schools. It should also be made mandatory for all employers to take
steps for intellectual, vocational and educational well-being and
upliftment of child workers who were so far engaged by them. The
non-government organizations should make a pertinent duty to
convince the parents that a promising future awaits for them and for
their children if they send their kids to the school instead of work field
and no matter in the sea of educated unemployment their children
may get through and can expect a bright future instead of
perpetuating their poverty and degradation by not doing so.
Many NGOs like CARE India, CRY, Global March against child labor, etc
have been working to eradicate child labor in India. The child labor
can be stopped when knowledge is translated into legislation and
action, moving good intentions and ideas into protecting the health of
the children. The endurance of young children is higher and they
cannot protest against discrimination. Focusing on grass root
strategies to mobilize communities against child labor and reintegration of child workers into their homes and schools has proven
crucial to breaking the cycle of child labor. A multi disciplinary
approach involving specialist with medical, psychological, and socio-

anthropological level is needed to curb this evil. It is in this context

that we have to take a relook at the landmark passing of the Right of
Children to Free and Compulsory Education (RTE) Act 2009, which
marks a historic moment for the children of India.

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