In the case of child labor in the mining industry in Northern Ghana, [ 24 ] found the majority of children engaged in mine-related work appears interested in attending school, and many continue to engage in arduous mining activities in order to pay for their school fees.
Study of Child Labor Among School Children in Urban and Rural Areas of Pondicherry
A rural household model was implemented and econometric analysis shows that, on average, market imperfections e. An inverse relationship was estimated between child labor and per capita landholding [ 26 ]. However, families with mid-range landholdings tend to use more child labor, as the marginal value of farm work rises faster than education. There are examples of agricultural policy reforms reducing child labor and increasing the educational attainment of children globally. In , to increase its rice exports and reduce child labor, Vietnam lifted its restrictions on rice exports.
The supply chain of cocoa production is one of the largest impediments to eliminating labor in the cocoa sector. Unlike other commodities grown in Africa, cocoa is grown in remote areas and can take weeks or months to come to market. So, by its very biological nature, it is more difficult to determine if cocoa which is often sold and blended between farms many times before sold to a wholesaler has been produced with child labor.
Thus, historically, child labor in cocoa has been less regulated, less enforced, and more prevalent than in crops with a shorter supply chain. Furthermore, a Ghanaian law specific to cocoa states the following activities to be hazardous child labor activities : clearing of forest or felling trees, working with agrochemicals, breaking cocoa pods with a breaking knife, climbing trees higher than three meters, and harvesting overhead cocoa pods with a harvesting hook. However, despite legislation, these activities are still undertaken by children in Ghanaian cocoa production with little disincentive to cease.
A Tulane study [ 30 ] found that the total number of children 5—17 years old working in the cocoa sector in the previous twelve months was ,, which accounts for Ninety-five percent of the children working in the cocoa sector—equivalent to The report also found that Consequently, households do not need to diversify their income portfolios by moving on-farm to off-farm child labor.
As such, this study explores what economic incentive, in the form of a price premium similar to the approach put forth by [ 31 ] , would be necessary to make a cocoa-growing household indifferent to using child labor. This approach is unique because, unlike mandates and international pressure from activists which punish poverty-stricken households who use hazardous child labor, this study estimates a premium to incentivize its reduction.
The role of the Ghanaian Cocoa Marketing Board COCOBOD in cocoa production is twofold: to i administer the process of internal marketing and ii hold the monopsony power in internal cocoa purchasing from farmers and monopoly power in exporting cocoa [ 32 ]. For the period to , the farm gate price for Ghana was set at In , Mr. This study develops a farm household model [ 20 ] that accurately reflects the production and market conditions of the Ghanaian cocoa industry. While the farm household produces cocoa as a cash crop, they also cultivate food crops such as cassava, yam, and maize [ 36 , 37 ], mainly for subsistence consumption.
Since cocoa is a cash crop, all production is surplus and sold at the farm gate price. The household structure treats farmers as both semi-commercial and semi-subsistence with elements of both producer and consumer theory. Consequently, farmers make both production versus consumption and work versus leisure decisions simultaneously. Given that labor is a principal variable input for cocoa production and the involvement of children in cocoa production activities, labor is a key part of the model strategy. Benevolent parents make decisions on their own time allocation and also the time allocation of their children.
The cocoa-producing household utilizes its own adults and children labor and hired labor in cocoa production due to the financial importance of this crop. By contrast, for food production, the household only utilizes its own adults and children labor. Therefore, adults split their time between cocoa production, food production, and leisure.
This study assumes that children are less productive per hour of work than adults, and more importantly hired, adult, and child labor are imperfect substitutes because hired labor and children are not able to manage the farm and make production decisions. The imperfect substitution in labor types implies that separability between income and expenditure fails. To analyze the impact of a restriction in child labor, the model includes a constraint on the amount of time children can dedicate to work in cocoa production.
Finally, the price of cocoa, food, and wage rate are endogenous as these markets clear, whereas the price for non-labor inputs and non-food goods are exogenous. A representative cocoa farm household is assumed to maximize its utility U from food consumption F , non-food consumption M , leisure for adults L a and child L e , and child education E e. The subsistence parameter implies that d units of food must be consumed before the household will spend income on M or E e. The first set of terms on the right side of 1 express utility of both consumption goods F and M and leisure L a and L e , while the second set of terms represents net present value of future utility of children based on their obtained level of education E.
Because of the perennial nature of cocoa trees and a life cycle of about 25 years, land is assumed to be a fixed factor of cocoa production and dictates the degree of decreasing returns-to-scale in the production function. Households do not utilize hired labor in food production because cultivation typically takes place on small plots and food is only for home consumption.
The cash income constraint is 6 where w and r are the wage rate and rental rate of land, P j are input prices for the j th non-labor input, P F is the price of food, P M is the price of non-food, P E is the price of education, and P c is the price of cocoa. Because food production follows constant returns-to-scale technology, net profits are zero and food production does not explicitly contribute to farm income, although it does reduce the net cost of food items purchased from the market. The total time constraint for adults is 7 where total time availability for adults t a equals time spent on cocoa production L ac , food production L aF , and leisure l a.
The total time constraint for children is 8 where total time availability for child t e equals time spent on cocoa production L ec , food production L eF , formal education E e , and leisure L e. Furthermore, both domestic e. Therefore, this study considers a labor restriction only for cocoa production: 9 where is the maximum amount of time children can spend in cocoa production.
This study assumes that, if binding, this restriction limits the time children spend engaged in child labor while leaving acceptable forms of children working unaffected. The study simplifies the budget constraint 6 and the child labor constraint 9 as follows.
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The right side of Eq 10 is income from profits from cocoa and staple food production and non-farm income T. Further, substituting L ec from Eq 8 into the child labor restriction 9 yields The budget constraint 10 brings out an important property of this model discussed at the start of this section: the separability property, where consumption and production decisions are made independently, fails to hold. The breakdown of the separability property stems from hired, child, and adult labor being imperfect substitutes. An increase in adult leisure, which implies a decrease in the amount of adult labor used in cocoa production, directly impacts production decisions because the decline in adult labor cannot be met by an equal increase in either hired or child labor.
The opposite holds true for a decline in adult leisure. The same logic also follows for changes in child leisure. Consequently, in the first-order conditions for L a , L e , and E e , marginal utility is equal to a term that is a function of the wage rate and total labor L c used in cocoa production, among other variables see the corresponding Karush—Kuhn—Tucker in Appendix A in S1 File. Similarly, in the first-order conditions for L c , the marginal value product of total labor L c is equal to a term that is a function of the wage rate, leisure L a and L e , and education decision E e variables.
Consequently, a direct link between utility and production decisions exists, which implies that separability does not hold. The price for cocoa, wage rate, and food price are solved through their respective market clearing conditions. However, since this analysis considers the effects of child labor policy on world cocoa markets, any structural change in the world price will be passed on to the farmers. The market-clearing condition, which determines the world cocoa price, is such that Ghanaian cocoa production equals world demand for Ghanaian cocoa: 12 Supply of Ghanaian cocoa on the left side is given by Eq 2.
This residual demand function is calculated as total world demand for cocoa minus supply of cocoa by all non-Ghanaian countries, which allows the analysis to maintain focus on the Ghanaian cocoa market. As child labor is reduced, cocoa-producing households are likely to hire more labor, which could raise the wage for hired work. The left side is demand for hired workers defined in Eq 3.
While cocoa farmers produce some food for consumption, it is not sufficient to meet the food requirements of the household. As a result, a portion of the total food consumption is purchased from the food market. A change in child labor practices could result in the cocoa household purchasing more or less food from the market, which could impact the price.
The food market-clearing condition is such that total supply of food is equal to demand by cocoa-producing households: 14 The first term on the right side is food production by cocoa farmers, given by Eq 4 , and the second term is food purchased by cocoa farmers at the given market price.
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The right side is cocoa farm household food consumption, given in Eq 1. Given the highly non-linear nature of this model, the system is solved numerically the Lagrangian, first-order conditions, and full system of equations are provided in Appendix A in S1 File. The model presented in the previous section is calibrated to the Ghanaian cocoa market to simulate the effect of removing child labor in cocoa production.
All relevant data are within the manuscript and its supporting information files. As summarized in Table 2 , these sources provide data on the following variables: the number of cocoa farming households, the value of production inputs per hectare, the annual household budget structure, time use, and cocoa price. Exchange rate used for monetary conversion is 1. In addition, data on annual cocoa production and national food balance sheet are obtained from [ 39 ], while the price of non-labor production input was collected from the literature [ 40 ] and adjusted by inflation.
As discussed in detail below, the parameters and exogenous variables in the model are calibrated to match the prices and output levels during the period — Table 3 presents the values of these calibrated parameters and exogenous variables. The price of labor and non-labor inputs are taken as their respective averages based on the [ 12 ] dataset and [ 40 ] adjusted by inflation. In Ghana, sharecropping contracts generally are made between farmers and landowners. Thus, the rental rate for land was taken as the average monetary value of cocoa production given to landowners divided by the average cocoa farm size based on [ 36 ].
Given these share parameters, cocoa production, and input data, the cocoa productivity parameter Z c in the production function is calibrated as the residual:.
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The value of food consumed is calculated as the annual average food consumed by cocoa-growing households based on [ 36 , 37 ] divided by the price of food. Given , the amount of the food produced by the household was calculated as the percentage of food consumption not purchased from the market Table 2. The total time available for adults and children measured in man-days is taken as their respective per household values based on [ 12 , 30 ], multiplied by the number of cocoa-producing households in Ghana. The subsistence level of consumption for food was calculated as the contribution of maize, rice, cassava, and yam to the Recommended Daily Allowance RDA 0 for calories.
According to [ 39 ], these four crops provided Furthermore, the percent of farming households who harvest cassava, yam, and maize were estimated at For the calibration, the study used the RDA 0 value of 2, kcal. The value 2, kcal is the energy requirements of an adult male between the ages of 19 to 50 presented in [ 41 ].
The total value of household consumption expenditures EXP 1 for food, non-food, and education was taken as their average values from [ 36 , 37 ]. The non-cocoa income parameter T was calibrated as the residual income such that the full-income constraint holds with equality.
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