Economics investigatory project class 12: Draft

The impact of child labour on the economies of developed and developing countries.

“Widespread child employment dampers future economic growth through its negative
impact on child development and depresses current growth by reducing unskilled wages
and discouraging the adoption of skill-intensive technologies.” – GLM

“Nearly 1 in 10 children are subjected to child labour worldwide, with some forced into
hazardous work through trafficking.” - UNICEF

Introduction:
Child labour often physically strains a child to disturbing levels and can also leave children
traumatised for the rest of their lives. According to a report in 2020 by the American
lecturer, Eric Edmonds of Dartmouth College 218 million children were working of which 70
percent were in child labour (152.6 million). Whilst it is well acknowledged that Child labour
is unethical and is frowned upon – especially in developed countries. However, the impact
of child labour on the economy and economic growth is often overlooked. It is easy to
assume that child labour will have a positive effect on the economy as the percentage of the
working class is greater, but this is not always the case, child labour is more likely to stunt
the future economic growth of the country.

Firstly, we must understand what causes child labour.

Child labour has many causes such as wars, armed conflict, and crisis but the biggest is
poverty.
War: According to the international labour organization war and conflict in the middle east
during a period of turmoil in 2019. The report stated that many of the children that were
being exploited were refugees the conflict had forced parents to put their children to work
to cope. The jobs which the children occupied were not easy jobs by any means, they were
often dangerous and gruelling.
Jobs taken up by children in war-struck areas in the middle east and Africa:
1) Agricultural work - “Such labour takes place mostly in rural areas and represents a
cheap workforce for small-scale farming – mostly non-mechanized labour-intensive
methods of production involving high risks.”
2) Smuggling goods and weaponry across the border and collection of body parts for
burial.
3) Direct involvement in armed conflict “The majority of recruited children are generally
boys. However, there is an emerging tendency to recruit more girls and children
below the age of 15. Hundreds of children across the Arab region are also held in
detention and even tortured on grounds of being involved in armed groups,”

Distribution of working children by sector:

Children are not uniformly distributed across industrial sectors. The chart plots the
distribution of working children across sectors for the data available across countries in
the WDI (world development index) data. 65 percent of working children are in
agriculture, 13 percent in manufacturing, and 19 percent in services.
 The other chart shows us that almost 75% of these children are unpaid this is often work
given by family members or relatives in order to survive.

Living and working standards of children:

Child labour often exposes the children to extremely poor living standards which would be
deemed by most as unacceptable for a human.

Poverty is a worldwide issue, and it could be argued that it is the greatest threat to human
life on earth as we know it alongside global warming.
Poverty is on the rise, at a faster rate than never before. The earth’s population has now
reached 8 billion of which according to the world bank 719 million live in extreme poverty
(less than $2.15 per day). This leads to parents forcing their children to work small jobs
instead of going to school to buy necessities for human life such as food and water.

The impact of child labour on the economy of a developing country:

It is easy to say that child labour will have a positive impact on the economic development of
a developing country as the working population of the country will be greater hence gross
national income would be higher. However, this is only short term and is not sustainable for
the development of country (economically and socially).

The graph below shows the relation between the economic activity of children aged 7-14
and GDP per capita in USD for different countries. The impact of child labour on the
economy of a developing country. The size of the circle represents the number of children
between the age of 7 and 14 who are child labourers within that country.

It is evident from the graph that there is a correlation – the countries with a lower GDP per
capita often have the highest percentage of child labourers whilst those with a higher GDP
per capita tend to have a lower percentage of working children within the specified age
bracket.

Short run – In the short run findings report that an increase in economic activity of children
aged 7-14 would increase the household’s income and GDP of the country in this short time
period would increase. The probability of survival would also increase.

Long run (this is what usually defines the economic development and sustainability of a
country) – In the long run reports have suggested that increasing the percentage of working
children perpetuates household poverty through lower human capital.

Impact of child labour on education:

The impact of child labour on education is very alarming it deprives children of their right to
education and impedes their overall development.

Child labour often forces children to work long hours, leaving little or no time for them to
attend school. These children are denied access to formal education, which is essential for
their intellectual, social, and emotional growth. Lack of access to education perpetuates the
cycle of poverty and denies children the opportunity to break free from a life of exploitation
and low-skilled work.

Child labour negatively impacts the quality of education for those who manage to attend
school. Children engaged in labour often suffer from physical exhaustion, lack of
concentration, and increased stress levels, this can impact their ability to focus on their
studies eventually leading to lower grades than those who are not involved in child labour.

This lack of education and productivity is reduced as these children will often continue to
work low skilled jobs for the rest of their life because they were not able to make the most
out of their days in school. This means that it will be a lot harder for the economy of
countries with a high percentage of children involved in child labour to grow as these low
skilled jobs are low paid and so will not yield enough income for economic development.
These low paid jobs will also lead to low tax revenue as low wages means reduced tax
revenue for the

Child labour in a developed country:

Whilst child labour is often seen as a third world / developing country problem it does occur
in some of the strongest and most influential economies on the world. For example, in the
United States of America the federal government reported that in the last fiscal year 835
companies had employed children illegally and there was a total of 3800 children working
illegal. Whilst this is not a significantly large number when compared to 10 million in India it
is still shocking and unacceptable for a global superpower such as the world largest
economy. The federal government also stated that child labour in the US is on the rise and is
definitely a concern for the country which should be addressed as soon as possible.

On February 4th, 2023, the South Korean multinational automotive company Hyundai Motor
company released an open letter to detail that it will be divesting its stake in an Alabama
based metallic plant that is among several suppliers which are currently under investigation
for employing children as young as 12 by the department of labour. Hyundai also said that it
is “implementing new, more stringent workforce standards throughout its supply chain."

The impacts of child labour on the economy of a developed country:

Child labour has a significant impact on the economy of a developed country, albeit to a far
lesser extent than that of some of the developing countries discussed earlier. Here are some
of the impacts of child labour on the economy of a developed country:

Diminished Human Capital: Child labour deprives children of the opportunity to acquire
education, skills, and knowledge which is necessary for their future economic productivity.
The lack of education and training limits their potential contribution to the workforce,
reducing the overall human capital of the country. This can have long-term effects on
economic growth and competitiveness. The overall impact of child labour would actually be
greater per working child since the economy is already so great hence the drop in skill is
much greater which means that less income is produced.
Reduced Productivity: In instances where child labour exists in certain sectors or informal
economies within the US such as the metallic plant in Alabama can lead to reduced
productivity. Child labour often involves tasks that are physically demanding or require
specific skills. Children may lack the maturity, physical strength, and expertise to perform
these tasks at the same level as trained adult workers, which can impact the overall
productivity of industries employing child labour.

Undercutting Wages and Labour Standards: In cases where child labour is used to decrease
wages, it can lead to a decline in labour standards and wages for adult workers. When
children are paid significantly less than adult workers, it creates a competitive disadvantage
for responsible employers who abide by labour laws and pay fair wages. This can create a
“race-to-the-bottom scenario”, negatively impacting the overall labour market This issue is
greater in developed economies such as America or the UK since there are fewer low skilled
jobs and so a greater demand for them. This can in turn increase unemployment rates.

Social Costs: The existence of child labour poses social costs to the US economy. Child labour
often results in health and safety risks, including workplace accidents and injuries. The
physical and psychological harm endured by the children can cause an increase in the
demand for healthcare and social support services which will therefore impose larger costs
on these services and programs. This impact is much larger in developed economies as
healthcare standards are higher and so naturally more cost is incurred. Also, some countries
such as England provide free healthcare known as the NHS (national health service) this is
funded using tax collected by the government. So, child labour would indirectly cause tax to
rise which negatively impacts the economy.

Reputation and Business Practices: The use of child labour can also have an impact on the
reputation and business practices of companies in developed countries. In recent years,
there has been an increased focus on ethical sourcing and responsible business practices
such as workers’ rights and fair trade. Companies found to employ or support child labour
face reputational damage, potential legal consequences, and consumer backlash, which can
impact their sales negatively as many people in the developed world often boycott such
companies with tarnished reputations.

government. Hence making it challenging for the government to fund essential public
services (which are already poor in developing countries) such as healthcare, infrastructure
development and improving food insecurity.

The child labour and poverty cycle:

Child labour and poverty are deeply intertwined, forming a dangerous cycle that is cause for
the suffering of millions of children worldwide. The child labour and poverty cycle refer to
the phenomenon where poverty forces children into work, depriving them of education,
health, and a normal childhood. In turn, the lack of education and opportunities traps them
in a cycle of poverty, making it difficult for them to escape their circumstances and build a
better future. This cycle is extremely cruel because it does not only limit the child’s future
but also many generations to come.
Sample questionnaire:

1) What is your name: Barry

2) Which country do you currently reside in:
a) India(developing)
b) England(developed)
3) What is your gender?
a) Male
b) Female
4) What is your age?
a) 7-10
b) 11-14
c) 15-18
5) Are you currently a working child?
a) Yes
b) no
6) Do you know and working children?
a) Yes
b) no
7) Do you think child labour is a problem is an issue in your country?
a) Yes
b) no
8) On average how many days of school do you miss each month?
a) None
b) 1-4
c) 5-10
d) More than 10

The following questions are only for those who are currently involved in child labour.

9) Do you get paid for working?

a) Yes
b) no
10) Do you get abused at work?
a) Yes – everyday.
b) Sometimes
c) Once or twice
d) Never

11) Did you choose to work or were you forced?

a) My choice
b) I was forced.
12) Are you working to support your family?
a) yes
b) no
1) What is your name: Sam
2) Which country do you currently reside in:
a) India(developing)
b) England(developed)
3) What is your gender?
a) Male
b) Female
4) What is your age?
a) 7-10
b) 11-14
c) 15-18
5) Are you currently a working child?
a) Yes
b) no
6) Do you know and working children?
a) Yes
b) no
7) Do you think child labour is a problem is an issue in your country?
a) Yes
b) no
8) On average how many days of school do you miss each month?
a) None
b) 1-4
c) 5-10
d) More than 10

The following questions are only for those who are currently involved in child labour.

9) Do you get paid for working?

a) Yes
b) no
10) Do you get abused at work?
a) Yes – everyday.
b) Sometimes
c) Once or twice
d) Never

11) Did you choose to work or were you forced?

a) My choice
b) I was forced.
12) Are you working to support your family?
a) yes
b) no
1) What is your name: Elliot
2) Which country do you currently reside in:
a) India(developing)
b) England(developed)
3) What is your gender?
a) Male
b) Female
4) What is your age?
a) 7-10
b) 11-14
c) 15-18
5) Are you currently a working child?
a) Yes
b) no
6) Do you know and working children?
a) Yes
b) no
7) Do you think child labour is a problem is an issue in your country?
a) Yes
b) no
8) On average how many days of school do you miss each month?
a) None
b) 1-4
c) 5-10
d) More than 10

The following questions are only for those who are currently involved in child labour.

9) Do you get paid for working?

a) Yes
b) no
10) Do you get abused at work?
a) Yes – everyday.
b) Sometimes
c) Once or twice
d) Never

11) Did you choose to work or were you forced?

a) My choice
b) I was forced.
12) Are you working to support your family?
a) yes
b) no
1) What is your name: Barry
2) Which country do you currently reside in:
a) India(developing)
b) England(developed)
3) What is your gender?
a) Male
b) Female
4) What is your age?
a) 7-10
b) 11-14
c) 15-18
5) Are you currently a working child?
a) Yes
b) no
6) Do you know and working children?
a) Yes
b) no
7) Do you think child labour is a problem is an issue in your country?
a) Yes
b) no
8) On average how many days of school do you miss each month?
a) None
b) 1-4
c) 5-10
d) More than 10

The following questions are only for those who are currently involved in child labour.

9) Do you get paid for working?

a) Yes
b) no
10) Do you get abused at work?
a) Yes – everyday.
b) Sometimes
c) Once or twice
d) Never

11) Did you choose to work or were you forced?

a) My choice
b) I was forced.
12) Are you working to support your family?
a) yes
b) no
What is your name: Holly
2) Which country do you currently reside in:
a) India(developing)
b) England(developed)
3) What is your gender?
a) Male
b) Female
4) What is your age?
a) 7-10
b) 11-14
c) 15-18
5) Are you currently a working child?
a) Yes
b) no
6) Do you know and working children?
a) Yes
b) no
7) Do you think child labour is a problem is an issue in your country?
a) Yes
b) no
8) On average how many days of school do you miss each month?
a) None
b) 1-4
c) 5-10
d) More than 10

The following questions are only for those who are currently involved in child labour.

9) Do you get paid for working?

a) Yes
b) no
10) Do you get abused at work?
a) Yes – everyday.
b) Sometimes
c) Once or twice
d) Never

11) Did you choose to work or were you forced?

a) My choice
b) I was forced.
12) Are you working to support your family?
a) yes
b) no
What is your name: Harshith
2) Which country do you currently reside in:
a) India(developing)
b) England(developed)
3) What is your gender?
a) Male
b) Female
4) What is your age?
a) 7-10
b) 11-14
c) 15-18
5) Are you currently a working child?
a) Yes
b) no
6) Do you know and working children?
a) Yes
b) no
7) Do you think child labour is a problem is an issue in your country?
a) Yes
b) no
8) On average how many days of school do you miss each month?
a) None
b) 1-4
c) 5-10
d) More than 10

The following questions are only for those who are currently involved in child labour.

9) Do you get paid for working?

a) Yes
b) no
10) Do you get abused at work?
a) Yes – everyday.
b) Sometimes
c) Once or twice
d) Never

11) Did you choose to work or were you forced?

a) My choice
b) I was forced.
12) Are you working to support your family?
a) yes
b) no
What is your name: Rithvik
2) Which country do you currently reside in:
a) India(developing)
b) England(developed)
3) What is your gender?
a) Male
b) Female
4) What is your age?
a) 7-10
b) 11-14
c) 15-18
5) Are you currently a working child?
a) Yes
b) no
6) Do you know and working children?
a) Yes
b) no
7) Do you think child labour is a problem is an issue in your country?
a) Yes
b) no
8) On average how many days of school do you miss each month?
a) None
b) 1-4
c) 5-10
d) More than 10

The following questions are only for those who are currently involved in child labour.

9) Do you get paid for working?

a) Yes
b) no
10) Do you get abused at work?
a) Yes – everyday.
b) Sometimes
c) Once or twice
d) Never

11) Did you choose to work or were you forced?

a) My choice
b) I was forced.
12) Are you working to support your family?
a) yes
b) no
What is your name: Priya
2) Which country do you currently reside in:
a) India(developing)
b) England(developed)
3) What is your gender?
a) Male
b) Female
4) What is your age?
a) 7-10
b) 11-14
c) 15-18
5) Are you currently a working child?
a) Yes
b) no
6) Do you know and working children?
a) Yes
b) no
7) Do you think child labour is a problem is an issue in your country?
a) Yes
b) no
8) On average how many days of school do you miss each month?
a) None
b) 1-4
c) 5-10
d) More than 10

The following questions are only for those who are currently involved in child labour.

9) Do you get paid for working?

a) Yes
b) no
10) Do you get abused at work?
a) Yes – everyday.
b) Sometimes
c) Once or twice
d) Never

11) Did you choose to work or were you forced?

a) My choice
b) I was forced.
12) Are you working to support your family?
a) yes
b) no
What is your name: Rahul
2) Which country do you currently reside in:
a) India(developing)
b) England(developed)
3) What is your gender?
a) Male
b) Female
4) What is your age?
a) 7-10
b) 11-14
c) 15-18
5) Are you currently a working child?
a) Yes
b) no
6) Do you know and working children?
a) Yes
b) no
7) Do you think child labour is a problem is an issue in your country?
a) Yes
b) no
8) On average how many days of school do you miss each month?
a) None
b) 1-4
c) 5-10
d) More than 10

The following questions are only for those who are currently involved in child labour.

9) Do you get paid for working?

a) Yes
b) no
10) Do you get abused at work?
a) Yes – everyday.
b) Sometimes
c) Once or twice
d) Never

11) Did you choose to work or were you forced?

a) My choice
b) I was forced.
12) Are you working to support your family?
a) yes
b) no
What is your name: Rithvika
2) Which country do you currently reside in:
a) India(developing)
b) England(developed)
3) What is your gender?
a) Male
b) Female
4) What is your age?
a) 7-10
b) 11-14
c) 15-18
5) Are you currently a working child?
a) Yes
b) no
6) Do you know and working children?
a) Yes
b) no
7) Do you think child labour is a problem is an issue in your country?
a) Yes
b) no
8) On average how many days of school do you miss each month?
a) None
b) 1-4
c) 5-10
d) More than 10

The following questions are only for those who are currently involved in child labour.

9) Do you get paid for working?

a) Yes
b) no
10) Do you get abused at work?
a) Yes – everyday.
b) Sometimes
c) Once or twice
d) Never

11) Did you choose to work or were you forced?

a) My choice
b) I was forced.
12) Are you working to support your family?
a) yes
b) no