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Trade Adjustment and Human Capital Investments: Evidence from Indian Tariff Reform

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Author Info
Eric V. Edmonds
Nina Pavcnik
Petia Topalova

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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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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12884.

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Date of creation: Feb 2007
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Handle: RePEc:nbr:nberwo:12884

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F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Dillon, Andrew, 2008. "Child labor and schooling responses to production and health shocks in northern Mali:," IFPRI discussion papers 755, International Food Policy Research Institute (IFPRI). [Downloadable!]
  2. 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. [Downloadable!]
  3. 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. [Downloadable!] (restricted)
  4. 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. [Downloadable!]
  5. Ana C. Dammert, 2007. "Child Labor and Schooling Response to Changes in Coca Production in Rural Peru," IZA Discussion Papers 2869, Institute for the Study of Labor (IZA). [Downloadable!]
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