I've heard different variations on this theory, but this one is the best written-up I've seen.

http://glamdamnit.tumblr.com/post/55713093884/my-sister-asked-if-the-events-of-the-labyrinth

Long story short:  The story happens over and over and EVERY goblin in the Labyrinth is a baby that Jareth stole.

And I *DO* hope that if the rumoured Labyrinth sequel happens, that they include it.