Commonly employed global tests for separability between production and consumption decisions are theoretically inappropriate when the market failures creating non-separabilities differentially constrain some, but not all households. Simulated maximum likelihood estimates using Chinese panel data...

We build a model of child labor and study its implications for welfare. We assume that there is a trade-off between child labor and the accumulation of human capital. Even if parents are altruistic and child labor is socially inefficient, it may arise in equilibrium because parents fail to fully...