History Repeats Itself: Child Labor in Latin America

Child labor occurs on almost every continent in the world. Very few countries seem to escape this exploitative phase as they develop into fully industrialized countries. Child labor began during the eighteenth century in Great Britain and it continues in the twenty-first century in Argentina, Mexico, Brazil, Chile, Guatemala, Costa Rica and Honduras. This paper offers an explanation for the persistence of child labor through history. The increase in the employment of children during industrialization is caused by an increase in the supply of children from poor and working-class families and an increase in the demand for child labor by the factory owners. Parents trapped in poverty have no other choice but to send their children off to work to contribute to the family income. Children’s wages, moreover, often make the difference between starvation and survival. Employers are happy to oblige the parents because children are more productive than adults in the new industrial regimen. As the principle of the division of labor has been applied to the production process, unskilled children replace skilled adults in factories, mills, and mines. Children are preferred to adults because they are cheap, submissive, uneducated and nimble. These economic forces are so strong that neither child labor laws nor mandatory schooling legislation are an effective deterrent against employers or families. Since history is repeating itself in the developing world by industrializing on the backs of children, alternative policies are recommend to cut this stage short so that the future generations of Latin America will become educated instead of exploited.

Unintended Consequences: the U.S. Postal Service Conundrum of Service,Business, Labor,and Politics

Employee Responsibilities and Rights Journal - This paper examines the 2020 turmoil surrounding the U.S. Postal Service—a crisis not seen since roughly 209,000 employees struck its...     

Introduction to “Unintended Consequences: The U.S. Postal Service Conundrum of Service,Business, Labor,and Politics”

Employee Responsibilities and Rights Journal -     

Economic integration and structural adjustments in North America,Central America and the Caribbean: A computable general equilibrium approach

The articles in this special issue are part of the results of an multinational research project entitled: “Regional Integration in Greater North America: A Research, Training and Policy Program.” It would have been impossible to undergo this multinational task without the economic support so kindly granted by the Ford Foundation and the continuous support of Dr. Norman Collins and Dr. Michael Conroy, both of whom worked for the Ford Foundation in Mexico City. The project also benefited from the institutional support of El Colegio de México (COLMEX), the Fundación Nacional de Desarrollo (FUNDE), from the University of California, Los Angeles, the University of California, Davis, as well as from the Inter–American Development Bank and the governments of the countries included in this study. This volume is the result of intense and collective work, not only by the authors of the articles, but also from other researchers and from officials belonging to various institutions in Central America, the Caribbean, Mexico and the United States. We wish to give our special thanks to Alfonso Goitia, Ph.D., Executive Director of FUNDE, El Salvador, for his support as well as his researchers, Mario Lungo and Sonia Baires. We also wish to thank Mr. Óscar René Cardona for his help during the first stages of our research for Guatemala. We would like to thank Professor Victor Bulmer Thomas for his support as well as the authorities from the Banco Central de Guatemala for their help in building the database used in our investigation of this country’s economy.     

Female Labor Supply: Adoption and the Labor Force Participation Decision

A bstract It is well established that the existence of children in the household reduces female labor force participation. This study seeks to determine if different methods of acquiring children ( adoption versus procreation ) affect participation decisions. Empirical results indicate that, other things being equal, women with one or more adopted children residing in their household are less likely to participate in the labor force than their nonadoptive counterparts.     

Fertility, Labor Force Participation and the Relative Income Hypothesis:

Abstract . AN empirical test with Canadian data was made of the relative income hypothesis which states that fertility and labor force participation depend upon relative income, where relative income refers to the current family income level relative to the family's desired income level. The interpretation of the desired income level is modified slightly to mean that it is determined not by the past parental income, as originally formulated, but by contemporaneous income levels of other age groups. An empirical model of labor force participation is estimated for the post-war period. The results on the whole tend to provide empirical support for the relative income hypothesis. The post-war baby boom, which led to a decline in the income of young adults relative to that of older age groups, had the effect of increasing participation rates of young adults, especially of young (married) women.     

Inflation,output and stock prices: evidence from Latin America

Research in economics and finance documents a puzzling negative relationship between stock returns and inflation rate in markets of industrialized economies. The present study investigates this relationship for the developing markets of Peru and Chile. Fama's model of linkages between inflation and real economic activity constitutes the theoretical framework of this paper. The study tests whether the negative relationship between equity returns and inflation is a result of a ‘proxy effect’, namely, a negative relationship between inflation and real economic activity. The evidence for Peru and Chile does not provide strong support for Fama's hypothesis. It is shown that the negative relationship between the real stock returns and unexpected inflation persists after purging inflation of the effects of the real economic activity. The long‐run equilibrium between stock prices and general price levels is weak, as indicated by the findings of the Johansen and Juselius co‐integration tests. However, in both economies, stock prices and general price levels seem to show a strong long‐run equilibrium with the real economic activity. These findings suggest that in the long‐run, Fama's propositions A and B are supported for Peru and Chile. The disparity between traditional regression and co‐integration test results suggest that it may be prudent to re‐examine the proxy effect in the framework of a long‐run relationship before denying its validity. Copyright © 1999 John Wiley & Sons, Ltd.     

Privatization, Labor and Social Safety Nets

Privatization promotes economic efficiency and growth, thereby reinforcing macroeconomic adjustment. In the short run, however, it can lead to job losses and wage cuts for workers. This paper discusses these adverse impacts of privatization in terms of various methods of privatization and surveys the existing empirical evidence. It finds that public sales and auctions can have stronger negative effects on workers but maximize the government's revenue. Policymakers' options for mitigating the social impact of privatization are surveyed.     

Henry George and Organized Labor:

A bstract . Henry George supported labor unions and was proud of his membership in the Printers' Union. But he did not regard them as the final solution of labor exploitation. He championed labor as one of the producing classes. His foray into politics as the candidate of organized labor's third party was characteristic; he had had much involvement in politics earlier. Although he supported labor's immediate demands, he sought mainly to use his candidacy to build a constituency for the single tax. Samuel Gompers , then head of the American Federation of Labor , at first worked for George's election but came to the belief that the unions alone should direct and control their political efforts. This view prevailed, though he and George remained good friends. But it is now a question whether Gompers' policy, at this time, serves labor's best interests.     

Labor quality,natural unemployment,and US inflation

The recent combination of low inflation and low unemployment has led some to question whether the short-run, Phillips curve trade-off is dead. We argue that the improved trade-off has resulted, in part, from improved labor quality in the form of increased average years of work experience and education, and use these variables to calculate new estimates of the natural unemployment rate. Based on evidence from inflation equations, we find strong support for a time-varying natural unemployment rate, and find that our measure based on labor quality outperforms other leading measures of natural unemployment.     

Residential Choice, Mobility, and the Labor Market

There is substantial evidence suggesting that the process of suburbanization creates new job opportunities that are not equally exploited by all workers. In order to explain this phenomenon, a simple model is developed which incorporates borrowing constraints as an important restriction on moving decisions, obstructing the necessary labor flows between jurisdictions required to equalize (net) wages. In essence, people who cannot borrow will be restricted in terms of their capability of changing residence location and therefore will have limited possibilities of working in distant labor markets, or they will be subject to excessive commuting. Furthermore, the labor allocation induced by households' behavior facing these constraints affects consumer welfare, production, and producers' profits. The outcomes with perfect credit markets and with borrowing restrictions are calculated and the economic welfare levels are compared. As wages are flexible, they adjust to reflect the relative scarcity of workers present in each jurisdiction. Consequently, some of the negative effects of the borrowing constraints are compensated, so the outcomes cannot be easily compared. Some numerical examples are constructed to have an idea of the possible outcomes under different conditions. Finally, it is found that allowing for moving cost deductions from taxable income may help to alleviate the problem.     

Segmentation in the Market for Child Labor: The Economics of Child Labor Revisited

Recent events have focused attention on international labor standards, with some special attention being paid to child labor. The diverse forms of child labor are often merged into one: a stereotype of "children sewing Nikes," although the situation varies widely from that model. Certain forms of child labor are not substitutable by adult labor; others are more appropriately modeled as a form of apprenticeship. A simple family utility function helps elucidate the reasons. The ultimate purpose of the paper is to challenge the policy ambiguity—we cannot tell whether restrictions on child labor are good or bad—that was a result in Basu and Van's earlier (1998) modeling of child labor