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1、TheEconomicJournal,110(March),C50±C61.#RoyalEconomicSociety2000.PublishedbyBlackwellPublishers,108CowleyRoad,OxfordOX41JF,UKand350MainStreet,Malden,MA02148,USA.THEINTRIGUINGRELATIONBETWEENADULTMINIMUMWAGEANDCHILDLABOURKaushikBasuBecausemostparentssendtheirchildrentoworkwhencompelledbypove
2、rty,onewouldexpectariseinadultwagetolowerchildlabour.However,iftheriseinwageisachievedbyaminimumwagelaw,itsimpactcanbeintriguing.Itcan,forinstance,causesomeadultstobeunemployedandsendtheirchildrentowork,whichinturndisplacesmoreadultlabourandsendsmorechildrentowork.Thepapersolvesthisprocess
3、andpredictstheincidenceofchildlabour.Itshowsthat,forappropriateparametriccon®gurations,childlabourmayfallorriseastheadultminimumwageisraised.1.MotivationThereisnowconsiderableevidenceandsometheoreticalreasonforbelievingthat,indevelopingcountries,improvementintheconditionofadultworkersresul
4、tsinthedeclineofchildlabour,sinceparentscanthen`afford'totaketheirchildrenoutofthelabourforce(Goldin,1979;HoranandHargis,1991;Bonnet,1993;Basu,1999a;Ray,1999).Hence,oneroutetocurbingchildlabouristointerveneintheadultlabourmarket.However,muchdependsonhowweintervene.Ifweadoptpolicieswhichrai
5、sethemarginalproductivityofadultworkers,therebyraisingwagesandemployment,alliswell.Ontheotherhand,theeffectofaminimumwagelegislationtobolsteradultwagescanbecomplicated.Insomecircumstancesthismaycauseadropintheincidenceofchildlabour.Buttheanalysisgetscomplexiftheincreaseinwagecausesadultune
6、mploymenttoincrease.Thisisbecauseinmostdevelopingcountriesunemploymentbene®tsarenon-existent;soitislikelythatadultswhoareunemployedwillsendtheirchildrentowork.Soaminimumwagecanresultinahighersupplyofchildlabour.Thiswilltypicallycauseanincreaseinchildemployment,which,inturn,willcausefurther
7、lossesinadultemploymentandfurtheradditionstothesupplyofchildlabour.Thefullimpactofthismultiplier-likeprocesscanbelarge.Thispaperdevelopsamodelwhichhelpsuspredicttheneteffectofsuchinterventions.Whilemyfocushereisonchildlabour,modelsofthiskindareusefulforanalysi