Child labour in a transition economy: Evidence from Albania

Previous research on child labour has found that poverty increases the incidence of child labour. In this paper, I build a model of child labour which argues that a missing component in the previous findings is the existence of labour market imperfections. Its findings predict an ambiguous affect of land on child labour, which depends on the degree of substitutability between land and labour. Empirically, this paper tests the degree to which child labour then depends on the levels of land that these communities receive. Allowing the effect of land on child labour to be nonlinear, it was found that there is a risk on an increase in the incidence of child labour as the land reform progresses and more land is allocated to farm families. The results of this paper suggest that labour market imperfections may be significant enough to offset the declining relationship between wealth and child labour.