Economic Freedom: Does Child Labor Help Children in Poverty?

Release Date
May 7, 2016

Topic

Economics Ethics Poverty & Inequality
Description

Does child labor help the children in poverty who work because they need that extra income to support their families? What are the alternatives? Could the power of free markets eventually raise their living standards? Economics Professor Benjamin Powell offers up a surprising analysis.

A Case Against Child Labor Prohibitions (Article): Professor Powell provides additional support for his argument against child labor laws in this article at Cato.org.
 
Income Inequality Explained (Playlist): Learn about the connections between globalization, economic development, income inequality, and poverty.
 
Social Justice: Capitalism and Exploitation (Program): Are free markets exploitative, or the key to reducing poverty?

Haleema is an 11 year old girl. She works in a Bangladeshi garment factory. She has to process Hanes underwear. She clips loose threads up to a 150 pairs per hour. She’s paid 53 cents a day for her efforts. Are we doing something wrong by buying the products made with her labor?
 
I’m Benjamin Powell. I direct the free market institute at Texas Tech University where I’m also an economics professor I’ve spent over a decade studying sweatshops and child labor in poorer countries around the world. We feel bad when we buy products made with child labor. But most children who work in poorer countries don’t work making us products.
 
They work in agriculture or household services. It’s only a small minority that work in manufacturing, and those manufacturing jobs tend to pay better than working in agriculture or services, and in the case of agriculture, injury rates are higher for children. When we stop buying products made with child labor, it doesn’t cure their poverty.
 
It just pushes more children into these other less desirable sectors of their economy. US Senator Tom Harkin proposed banning imports from Bangladesh because they were made with child labor. In response, thousands of child employees got laid off. According to Paul Krugman, many of these became child prostitutes or starved.
 
These are clearly worse alternatives. many people think child labor doesn’t exist because we have laws against it today. But when we were as poor as these countries are in the third world, we didn’t have laws against child labor, and the laws we had, weren’t restrictions at all. It wasn’t until 1938, that we had our first national anti-child labor law here in the United States.
 
By then, our incomes were up over $10,000 per person in today’s terms. But when we look around the world today countries that have incomes of $10,000 don’t have any child labor anyway. Children don’t work because their parents are mean or stupid. They work because they’re desperately poor and they need the meager income from the child to feed all of the family.
 
As the process of economic development happens incomes go up and children cease working and then only later do countries adopt later that prohibit child labor. If you want more children to go to school instead of work, donate money to a charity and pay children to go to school because the reason that they’re working is that their families are so poor that they need that meager income to survive.
 
The real cure for child labor is adopting institutions that support economic freedom, private property rights, and the rule of law. When that happens, the process of economic development occurs, and child labor is ended all on its own.