The article embeds child labor in a standard general equilibrium, two-sector model of a small open economy facing perfectly competitive markets, efficiency wages, and free trade. The modern sector uses skilled adult labor and capital, and the agrarian sector uses unskilled (child and adult)...

The theory of involuntary international transfers (war indemnities) has been constructed on the assumption that the donor and recipient are completely indifferent to each other's well-being. The assumption is hard to justify since usually the transfers closely follow periods during which the...