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Authors:

• Arnab K. BASU
  The College of William and Mary

• Nancy CHAU
  Cornell University

Despite recent multilateral efforts to single out child labor in debt bondage as one of the "Worst Forms of Child Labor", yet to be addressed are a number of important questions: How pervasive is the phenomenon? Are there systematic corrections between the incidence of children in debt bondage and the economic, legislative and financial development indicators of the economy? How do national and international policy measures aimed at targeting the form of child labor fare once the phenomenon of debt bondage is understood in the context of these economic, legislative and financial correlates? This paper addresses each of these questions. The empirical findings suggest strong correlation between the likelihood of the incidence of bonded child labor with the stage of development of an economy; the stage of financial development; and the enforcement of core labor rights. Building on these evidences, this paper presents a theoretical model that highlights the relative drawbacks and merits of a number of policies aimed at putting checks on child labor in debt bondage.