Literature Review and Theoretical Framework
The Convention on the Rights of the Child (1989) adopted by the United
Nations defines a child as every person who is below the age of eighteen. In theory,
child labor practices are regulated by International Labor Organization (ILO)
Convention 29 (1930), which calls for the abolition of forced labor, and Convention
138 (1973), which provides for a minimum age of employment. In practice however,
many children are still working in a variety of situations. Some young people work
for their families without wages while others work in the labor market with wages.
International organizations, governments and researchers have recently shown a
growing interest in the issue of child labor. Many efforts have been made to
determine the factors that relate to the supply and demand of child labor.
The major theory of household decision-making with regard to children’s
schooling and employment has been developed from the neoclassical models of
Becker (1964). Becker studied investments in human capital and stated that children
will go to school if the benefit from schooling (potential earning) is greater than the
cost (direct and indirect) after considering the difference between future and present
value.
The question that arises after one accepts the theory of human capital is: who
is responsible for making a decision about investment in schooling for the child? The
model of household decision-making underlying these studies is the neoclassical, or
so-called unitary, household model in which the family maximizes its welfare
function subject to a unified budget constraint that pools income from all sources.
This model abstracts from the potential conflicts between household members’
objectives. Household members are assumed to work together to maximize the
welfare of the household as a whole, and the rewards of children’s work are shared
by all household members in the form of a more relaxed budget constraint.
Most researchers assume that children have no bargaining power in the
household that and parents make decisions regarding their own interests (Becker &
Lewis, 1973). Becker and Lewis suggest that parents tend to invest more human
capital in children who are deemed to be more intelligent and highly skilled. This is
because the cost of investing in human capital for a more able child is cheaper than
that of a less able child. Moreover, parents anticipate that children with higher skill
levels will transfer resources to their siblings, which will decrease the average cost of
parental investment.
On the other hand, some researchers propose that children are able to
actively make decisions about household activities. Moehling (1995; 2005) suggests
that children do have bargaining power but it varies depending on how much they
contribute to the household income. Often, working children have the ability to alter
the allocation of resources within the household, even though they may not gain
equal power with their parents. Using data from the Bureau of Labor Statistics Cost
of Living Survey 1917–1919, Moehling (2005) found that expenditures on girls’
clothing increased in relation to the income they brought into the household.