We study the interactions between technological innovation, investment in human capital and child labor. In our setting … firms decide on innovation, then households decide on education. In equilibrium the presence of inefficient child labor … on child labor are welfare reducing, while a subsidy to innovation is the right tool to eliminate child labor and …

low-quality producers to defend their monopoly position and prevent innovation and entry of high-quality competitors … politician secures re-election by setting high bureaucratic costs and firms invest in network blocking innovation and entry …