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Trade and Child Labor: A General Equilibrium Analysis

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  • Subhayu Bandyopadhyay
  • Sudeshna C. Bandyopadhyay

Abstract

This paper augments the existing literature on trade and child labor by exploring the effects of terms-of-trade changes in the context of a three-good general equilibrium model, in which one of the goods is a nontraded good. We find that, under quasi-linear preferences, the effect of the terms of trade on child labor depends critically on the pattern of substitutability (or complementarity) in the excess demand functions between the export good and the nontraded good. We extend the analysis to the case in which factors move freely between the three goods, as in a Heckscher-Ohlin-type framework. Finally, we show that a balanced budget policy of taxing the education of skilled families to subsidize the education of unskilled families must reduce child labor without any effect on aggregate welfare.

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Bibliographic Info

Article provided by M.E. Sharpe, Inc. in its journal Emerging Markets Finance and Trade.

Volume (Year): 45 (2009)
Issue (Month): 1 (January)
Pages: 5-18

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Handle: RePEc:mes:emfitr:v:45:y:2009:i:1:p:5-18

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Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=111024

Related research

Keywords: child labor; nontraded goods; terms of trade; trade sanctions;

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  1. Edmonds, Eric V & Pavcnik, Nina, 2004. "International Trade and Child Labour: Cross-Country Evidence," CEPR Discussion Papers 4309, C.E.P.R. Discussion Papers.
  2. Jean-Marie Baland & James A. Robinson, 2000. "Is Child Labor Inefficient?," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 663-679, August.
  3. Edmonds, Eric V. & Pavcnik, Nina, 2005. "The effect of trade liberalization on child labor," Journal of International Economics, Elsevier, vol. 65(2), pages 401-419, March.
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