Perverse Consequences of Well Intentioned Regulation: Evidence from India’s Child labour Ban

South Asia

India

Labour Market

Labour Regulation / Inspection

P Bharadwaj, LK Lakdawala, N. Li

2013

Bharadwaj, Prashant, Leah K Lakdawala, and Nicholas Li. “Perverse Consequences of Well-Intentioned Regulation: Evidence from India’s Child Labor Ban.” Journal of the European Economic Association 18.3 (2020): 1158–1195.
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Secondary Data: National Sample Survey (NSS) of India. Available at: http://www.microdata.gov.in/nada43/index.php/home.

2020

Child Labor Prohibition and Regulation Act of 1986

1983-2008 (range of data)

The objective of the law was to regulate provisions related to child labor practices in India. The purpose of the paper is to evaluate the effectiveness of these laws.

The target population was children up to 14 years old – ineligibility to work in certain areas (see “Intervention”).

The 1986 law attempted to bring uniformity in the minimum age restriction—people up to age 14 were defined as children and therefore ineligible to work in certain industries and occupations. Subsequent additions to the list of industries banned from hiring children under 14 were made at various points between 1989 and 2008. The occupations subject to the ban after 1986 and before 1994 (the period examined in the paper) were occupations that involved the transport of passengers, catering establishments at railway stations, ports, foundries, handling of toxic or inflammable substances, handloom or power loom industry and mines among many others.

• Child labor (any economic activity, paid or unpaid)
• School attendance
• Household outcomes (income, expenditure, calories intake)

Difference-in-differences

Study design: simple differences-in-differences (pre and post-law), controlling for household and child-level covariates, such as characteristics of the household head and fixed effects for gender, state, and household size.
Sample: over 317,000 children between the ages of 6 and 13 who are related to the head of the household.
Survey Instrument: The employment schedule of the National Sample Survey (NSS) survey collects information on employment activities and wages in addition to household and individual level demographic data. The main measures of child time allocation examined in the paper are based on the child’s reported “principal usual activity” in the 365 days previous to the survey. These activities are reported as mutually exclusive categories. The authors define “Any Economic Activity” as any form of child work in any occupation, both within and outside the household, with or without pay, but excluding unpaid household chores performed for one’s own family (reported separately as “Unpaid Household Services”).

As a consequence of a ban on child labor in India (the Child Labor Prohibition and Regulation Act of 1986), the relative probability of child employment increased, and child wages (relative to adult wages) decreased.

Child Labour

Households

National

The relative probability of child employment increases and child wages (relative to adult wages) decrease after the ban. The increases in the probability of economic activity are largest for children (i) in areas where the industries targeted by the ban play a larger role in local labour markets, (ii) in areas where the probability of employer inspections is higher, and (iii) in families that are poorer.

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The increases in the probability of economic activity are largest for children (i) in areas where the industries targeted by the ban play a larger role in local labor markets, (ii) in areas where the probability of employer inspections is higher, and (iii) in poorer families.