Core Labour Standards and FDI: Friends or Foes? The Case of Child Labour
AbstractWe test the often-cited hypothesis that high levels of child labour attract foreign investors. Using panel data we show the overall effect, which child labour has on foreign direct investment (FDI), to be a (small) negative one. We find strong evidence for the theoretical prediction that child labour deters FDI by slowing down economic development. Weaker evidence is provided for our theoretical prediction that child labour can discourage FDI via its impact on the availability of a skilled labour force in an economy. The data do not indicate that high levels of child labour drive down the factor share of labour, thereby increasing the attractiveness of an economy for foreign investors.
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Bibliographic InfoPaper provided by Sonderforschungsbereich 649, Humboldt University, Berlin, Germany in its series SFB 649 Discussion Papers with number SFB649DP2006-014.
Length: 31 pages
Date of creation: Feb 2006
Date of revision:
child labour; FDI; core labour standards;
Other versions of this item:
- Sebastian Braun, 2006. "Core Labour Standards and FDI: Friends or Foes? The Case of Child Labour," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 142(4), pages 765-791, December.
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-03-11 (All new papers)
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