Wednesday, November 20, 2013

The Law of Unintended Consequences plays out everywhere

Who could be against bans on child labor, right? Well, those who understand that the ban comes with unintended consequences that cause outcomes worse than the ban itself.  Jeff Miron, discussing recent research on the effects of a new child labor ban in India, presents this passage from the research article:
… examine the consequences of India’s landmark legislation against child labor, the Child Labor (Prohibition and Regulation) Act of 1986. … [and] show that child wages decrease and child labor increases after the ban. These results are consistent with a theoretical model … in which families use child labor to reach subsistence constraints and where child wages decrease in response to bans, leading poor families to utilize more child labor. The increase in child labor comes at the expense of reduced school enrollment...

… also examine the effects of the ban at the household level. Using linked consumption and expenditure data, [they] find that along various margins of household expenditure, consumption, calorie intake and asset holdings, households are worse off after the ban.
Here's a link to the research paper at the National Bureau of Economic Research. [ht: Cato-@-Liberty.org]