This paper presents a general equilibrium model of a small open developing country that exports a range of differentiated products. The products are produced by monopolistic competitive firms using adult and child labour as well as capital. We show that a uniform tariff levied on exports produced with the help of child labour is a failure in terms of reducing child labour. A more effective course of action would be a firm- specifc tarif where the tarif rate varies with the amount of child labour incorporated in a single good. Such an instrument reduces child labour, but nevertheless it is bad even for the children, since it worsens their well-being via lower income and consumption.
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Paper provided by University of Kassel, Institute of Economics in its series Discussion Papers in Economics with number
54/04.
Length: 16 pages Date of creation: Feb 2004 Date of revision: Publication status: Published in Review of Development Economics, Vol. 11 (2007), pp. 49-62. Handle: RePEc:kas:wpaper:2004-54
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