1.       Pareto-improving Child Labor Reform (joint with Bidisha Chakraborty and Pan Liu)

Abstract: Child labor deprives children of their childhood, compromises their schooling, and stunts their future potential, yet it complements family income, possibly preventing destitution. This paper examines a dynamic laissez-faire economy with endemic child labor. It studies a policy designed to eradicate child labor, not by imposing compulsory schooling or an outright child labor ban but by making large-scale tax-financed investments in school quality, allowing parents to eliminate private, education-related investments in their children. Such improvements in school quality also boost current levels of human capital and incomes and raise future levels due to a human capital externality. These gains relative to the laissez-faire may be taxed to compensate parents for losing child-labor income. Paradoxically, incremental, small-scale policies can hurt. Transitioning to a long run with little or no child labor and no out-of-pocket education-related expenses may be Pareto-improving. As old-age support policies are being considered or expanded in the South where child labor is often endemic, our analysis offers theoretical footing for linking old-age support to keeping kids in school.