(Economics) DEVELOPMENT ECONOMICS Essay Example | Topics and Well Written Essays - 1500 words

(Economics) DEVELOPMENT ECONOMICS - Essay Example ng to the ILO, in 2004, 246 million children between the ages of 5 and 17 years were child labourers.2 This is not a new problem and throughout history their have been instances of child labour in almost all parts of the world. Starting twentieth century, attempts have been made to end child labour permanently. Unfortunately, developing countries, where the problem is most acute, have proved to be immune to legislative interventions. In this essay, we try to understand the reasons why legislations have failed to end child labour and discuss other measures and their efficacy. As early as in 1867, Karl Marx in â€Å"Capital† had outlined a formal model for the causes of child labour. Marx had noted that while technology ideally would require less labour, lower demand for labour would depress wages and hence it was worthwhile for capitalist to use labour liberally and for the workers to have their entire family work to make ends meet.3 In modern times, the most well-known economic model of child labour is from Basu and Van4. The Basu-Van Model argues that low income economies are characterized by multiple equilibria. There is a bad equilibrium in which the adult wages are low and the child wages even lower and so the parents are compelled to send their children to work in order to survive. The good equilibrium is when adult wages are high and no children are offered in the labour market. In between these two equilibria is the state when both the good and the bad equilibria exist. Unfortunately, both the good and the bad equilibria can be stable, i.e. if the economy is in the state of bad equilibrium, it is unlikely to get out of it. The Basu-Van model is based on two assumptions. The â€Å"Luxury Axiom† asserts that households send their children to work only when driven by poverty and a non-working child is a luxury good. The â€Å"Substitution Axiom† asserts that adult and child labour is substitut able. The figure below shows the Basu-Van Model. Thus, we see that