Economics, Literature and Scepticism

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I am a PhD student in Economics. I am originally from South Africa and plan to return there after my PhD. I completed my M. Comm in Economics and my MA In Creative Writing (Poetry) at the University of Cape Town, where I worked as a lecturer before starting my PhD.

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Wednesday, June 11, 2008

Kaushik Basu on Child Labour

Posted by Simon Halliday | Wednesday, June 11, 2008 | Category: |

Kaushik Basu is giving a series of lectures here at UniSi as a chair of Economics and Ethics for Collegio St. Chiara.

He gave his first lecture today, which was a theory-based seminar on a paper, which includes a model that he and a student of his have constructed on child labour in which consumer boycotting can result in negative outcomes for the household. The main counterintuitive result that they present is the fact that increased boycotts can result in a lowered wage to child labour, which results in households having to provide increased amounts of child labour in order to maintain a tolerable (subsistence) level of consumption.

This means that potential protesters should do research into the market that they plan to boycott before they go about boycotting it and possibly result in worse outcomes for the households whose interests they are nominally trying to defend. He argues, moreover, that some of the current international best practices have done all kinds of damages to small businesses. He offered evidence on companies such as Reebok, in the market of soccer balls in Pakistan, which came under immense pressure to disallow any form of child labour. The problem is that many individuals worked in a decentralized manner in their homes, or sheds close to their homes stitching these soccer balls. The fact that children could have been in the presence of these sheds or these (almost certainly female) labourers, or at least the fact that it is impossible to verify whether any child labour at all would have gone into the production of these balls has resulted in a complete centralization of the production in factories, and a shutting down of all the outsourcing to these women. This is an instance in which boycotting, combined with the informational problem of unverifiability has probably resulted in a reduction in welfare to those involved. Very interesting.

He does argue though that a lot more work and consumer objections/protesting could be done about industries in which children are at great risk, mining or certain dangerous factories and so forth, rather than those less malign industries, such as sewing or carpet weaving. I don't quite know what position to hold as of yet, except to say that it has made me think about this in a way that I might not have prior to reading the paper.

I'll see if I can find the paper, it was online earlier... darn.

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