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Trade Adjustment and Human Capital Investment

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Author Info

  • Eric V. Edmonds
  • Nina Pavcnik
  • Petia Topalova

Abstract

Do the short and medium term adjustment costs associated with trade liberalization influence schooling and child labor decisions? We examine this question in the context of India''s 1991 tariff reforms. Overall, in the 1990s, rural India experienced a dramatic increase in schooling and decline in child labor. However, communities that relied heavily on employment in protected industries before liberalization do not experience as large an increase in schooling or decline in child labor. The data suggest that this failure to follow the national trend of increasing schooling and diminishing work is associated with a failure to follow the national trend in poverty reduction. Schooling costs appear to play a large role in this relationship between poverty, schooling, and child labor. Extrapolating from our results, our estimates imply that roughly half of India''s rise in schooling and a third of the fall in child labor during the 1990s can be explained by falling poverty and therefore improved capacity to afford schooling.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/94.

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Length: 48
Date of creation: 01 Apr 2007
Date of revision:
Handle: RePEc:imf:imfwpa:07/94

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Related research

Keywords: Human capital; Labor markets; Poverty reduction; child labor; schooling; school attendance; primary schools; returns to education; education expenditure; educational expenditure; living standards; educational expenditures; street children; child labour; returns to schooling; adult literacy; educational expense; education reform; educational attainment; educational loans; younger children; education project; education policy; education loan; problems; educational purposes; education loans; educational subsidy; education infrastructure; formal labor market; educational outcomes; education program; school enrollment; working children; free education;

This paper has been announced in the following NEP Reports:

References

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Citations

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Cited by:
  1. Irene Brambilla & Guido Porto & Alessandro Tarozzi, 2008. "Adjusting to Trade Policy: Evidence from U.S. Antidumping Duties on Vietnamese Catfish," NBER Working Papers 14495, National Bureau of Economic Research, Inc.
  2. Dammert, Ana C., 2008. "Child labor and schooling response to changes in coca production in rural Peru," Journal of Development Economics, Elsevier, vol. 86(1), pages 164-180, April.
  3. Krisztina Kis-Katos & Robert Sparrow, 2009. "Child work and schooling under trade liberalization in Indonesia," Discussion Paper Series 8, Department of International Economic Policy, University of Freiburg, revised Mar 2009.
  4. Edmonds, Eric V., 2007. "Child Labor," IZA Discussion Papers 2606, Institute for the Study of Labor (IZA).
  5. Karan Singh, B, 2011. "Impact of adverse economic shocks on the Indian child labour market and the schooling of children of poor households," MPRA Paper 30958, University Library of Munich, Germany.
  6. Brambilla, Irene & Porto, Guido & Tarozzi, Alessandro, 2009. "Adjusting to trade-policy changes in export markets : evidence from U.S. antidumping duties on Vietnamese catfish," Policy Research Working Paper Series 4990, The World Bank.

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