...elements, namely income poverty, human capital exploitation. The main aim of the IPEC was to eradicate child labour in all its forms. But very soon the IPEC and the International Labour Organization (ILO) realized that it is very difficult to achieve this objective, since the problem is a multi-faceted one. Therefore, they modified their policy so that they focused on eradicating the worst form of child labour (Schlemmer, 1997). The ILO distinguishes between two kinds of activities: those that are harmful (child labour), and those that are not detrimental to children's physical and mental development (child work).

Human Rights Watch (1996, 2003) describes the alarming situation of children in the carpet, brick kiln, silk and sportswear industries. It is assumed that children involved in these industries are bonded to their employers. In this article we highlight the reasons why children are involved in these industries.

We focus our analysis on one of the worst forms of child labour, that of bondage. After studying the brick kiln industry of Tamil Nadu, South India we present some of our findings here. We show that in the interlinked credit-labour market child labour is used as a means of improving both bargaining power and productivity.

Both a qualitative and a quantitative survey were carried out on debt bondage in the brick kiln industry. We have interviewed owners, brokers and workers in brick kilns and also in the workers' village of origin. The quantitative survey focused on workers on the sites, whereas the qualitative survey focused on brick kiln owners and brokers. It was very difficult to survey workers in brick kilns. The workers were not able to talk freely, as the managers were present while they were being interviewed. They were very hesitant and embarrassed about answering our questions.

The questions addressed to workers focused primarily on three issues: their financial stresses, their working conditions and child labour. To show this relation the functioning of the brick kiln industry and the way workers are recruited had to be understood.

This article is organized as follows. In the first section we review the economic literature on child labour and analyse the exploitation of child labour in the labour market, by presenting the limits of these approaches. The second section analyses the presence of bondage labour in the brick kiln industry. The third section describes the functioning of the brick kiln industry, how the industry is organized and how labourers are recruited. In the fourth section we show that without the advance system this industry cannot exist. Finally, in the last section we present our conclusions from the survey carried out.

The Economics of Exploitative Child Labour

Generally, the literature on child labour has two main orientations. The first studies the phenomenon in relation to poverty. This approach is developed by Basu and Van (1998). In their article, they make an essential hypothesis called luxury axiom. According to this hypothesis, a household sends its child to the labour market when the family income, without the contribution of child labour, falls below the household's survival level. Hence, poverty becomes the main determinant of child labour. Ray (2000) led a comparative empirical analysis between Pakistan and Peru in order to verify the luxury axiom. The result derived from the test is rather interesting. The luxury axiom is confirmed in the case of Pakistan, but not in that of Peru. According to the author, parents' educational level in Peru is higher than that in Pakistan. Hence, in Peru, even in cases of crisis, children continue to attend school. Therefore, older children or women are the ones to enter the labour market. However, the cultural and religious factors in Pakistan urge the parents to send their young sons to the labour market. Women and daughters, on the other hand, are not involved in any remunerative activities. According to Bhalotra (2000), when wages in the labour market increase women enter the market, whereas girls are made to leave school to embrace domestic activities. There is, therefore, a switch in allocation of time and activity between daughters and mothers in Pakistan. Higher wages involve a drop out of girls from school, children involved in remunerative activities allocate less time on work and the remaining time is spent on leisure.

Child labour and education are conflicting, even if they are not mutually exclusive (Grootaert and Kanbur, 1995). To this extent, the second approach towards child labour analyses the weakness of parents' investment in education. Baland and Robinson (2000) show that parents are unable to internalize educational externalities. In an imperfect capital market poor parents do not invest in their children's education because they are not sure they will be repaid for their effort. According to Alderman and King (1998), education is an asset from which those who invest in it do not benefit directly, but others (i.e. children) do. As parents are not sure that their children will use their income to guarantee security when they are older, they prefer not to invest in their education. Baland and Robinson (2000) argue that society does not allow children to make a contract with their parents, assuring them that they will pay them back if they invest in their education. It is because of this situation that child labour becomes inefficiently high and children are thereby the worst off. Ranjan (2001) argues that if capital markets are better parents will invest in children's education because they care about their wellbeing. All of these approaches focus primarily on the wellbeing of children. However, they are all limited in that they fail to analyse the underlying problem--the exploitation of child labour.

Recently, two papers on the exploitation of child labour (Rogers and Swinnerton, 2002; Dessy and Pallage, 2005) have analysed parents' decision to send their children into the worst form of child labour. The convention C182 (ILO, 1999) defines the worst forms of child labour as all activities such as slavery, or practices similar to slavery; for example, the sale and trafficking of children, debt bondage (including forced or compulsory recruitment of children for use in armed conflict) and the use of children for prostitution, pornographic performances and other illicit activities. This convention distinguishes between two kinds of activities: (1) the light form of work, which is not considered as dangerous for...

NOTE: All illustrations and photos have been removed from this article.



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