Question

Market for Unskilled Labor Unskilled Wage Rate/Hour $2.00 S1.50 Labor Demand Curve 10 24 Number af Unskilled Warkers (millians) 2. The diagram drawn above shows the market for unskilled labor in which child workers may get hired, depending upon the circumstances. Currently, there are 10 million adult workers who are available for employment at the equilibrium wage rate of $2.00 per hour and no child worker is in the labor force in this market. (i) If the employers offer a wage rate of $1.50 and no child worker is allowed to work, how large will be the shortage of unskilled labor? (ii) Assume that it is legal to employ a child worker and that the productivity of a child worker is V2 of the productivity of an adult worker. Then, how many child workers would be working at this lower wage rate of $1.50? How much would a child worker earn per hour? 3. What are the alternatives to a complete ban on child labor?

Answer 1

Solution:

PART-1)

(i) Shortage of unskilled labor: 14 adult workers (=24 - 10)

(ii) The child workers who will be working at this lower wage rate of $1.50: 28 child workers (=14 * 2)

A child worker will earn 1/2 * $1.50 = $0.75 per hour

PART-2) The alternatives to a complete ban on child labor includes:

--Providing free child education free

-- Giving incentives for parents who send their children to school

-- Adding vocational training programs for teaches on learning skills.

-- A raise in the wage rate so as to attract more adult workers

-- There should be more employment of machinery

-- An increase the number of hours worked in a day

-- Deal with poverty first as child labor is a poverty expression.