Child Labor and Coordination Failures

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  • 1 January 2000
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      • Published in RePEc
Abstract
In this paper, we show how coordination failures may explain the prevalence of child labor in developing countries. We do so within a simple game-theoretic setup. Child labor arises in our environment because of the lack of a coordination mechanism between parental decisions to invest in the human capital of their children and firm's decisions to invest in skill-intensive technology. Governmental policies that help coordinate expectations lead to the disappearance of child labor.
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