This General Accounting Office report to two U.S. Senate subcommittees examines: (1) the economic and demographic characteristics of child workers; (2) serious injuries sustained by illegally employed children; and (3) the Labor Department's policy with regard to penalizing employers who illegally employ children. Federal child labor regulations are reviewed, the objectives and scope of the study are discussed, and the enforcement efforts of the Labor Department's Operation Child Watch are summarized. The results of the study indicated that: (1) low-income and minority children were less likely to be employed than high-income and white children; (2) more children from low-income than from high-income families worked in hazardous industries; (3) about 18 percent of working 15-year-olds worked in violation of child labor laws; (4) although the number of serious injuries to illegally employed children increased, the ratio of serious injuries to detected violations declined between 1983 and 1990; (5) most violations involving serious injuries of working children are associated with hazardous order violations; and (6) the Labor Department imposed the maximum penalty for nonwillful violations, but cited no cases of willful violation, during fiscal year 1990. (BC)