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Trade Sanctions and the Incidence of Child Labor


  • Harald Grossmann
  • Jochen Michaelis


The purpose of this paper is to develop an imperfect competition model of a small open developing country to analyze the effects of trade sanctions on the incidence of child labor. We show that a uniform tariff levied by the developed countries on imports produced with the help of child labor is a failure in terms of reducing child labor. A more effective course of action would be a firm-specific tariff where the tariff rate varies with the amount of child labor incorporated in a single good. While such an instrument reduces child labor, however, it worsens the children's well-being due to lower income and consumption. Contrary to expectations, the entrepreneurs in the developing countries, supposedly the main beneficiaries of child labor, are better off under trade sanctions as they realize higher profits. Copyright © 2006 The Authors; Journal compilation © 2007 Blackwell Publishing Ltd.

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  • Harald Grossmann & Jochen Michaelis, 2007. "Trade Sanctions and the Incidence of Child Labor," Review of Development Economics, Wiley Blackwell, vol. 11(1), pages 49-62, February.
  • Handle: RePEc:bla:rdevec:v:11:y:2007:i:1:p:49-62

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    References listed on IDEAS

    1. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72, pages 584-584.
    2. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, July.
    3. Jones, Ronald W. & Easton, Stephen T., 1983. "Factor intensities and factor substitution in general equilibrium," Journal of International Economics, Elsevier, vol. 15(1-2), pages 65-99, August.
    4. Takatoshi Ito & Peter Isard & Steven Symansky, 1999. "Economic Growth and Real Exchange Rate: An Overview of the Balassa-Samuelson Hypothesis in Asia," NBER Chapters,in: Changes in Exchange Rates in Rapidly Developing Countries: Theory, Practice, and Policy Issues (NBER-EASE volume 7), pages 109-132 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Kaushik Basu & Homa Zarghamee, 2008. "Product boycott a good idea for controlling child labor? A theoretical investigation," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 08-09, Indian Statistical Institute, New Delhi, India.
    2. repec:spr:ijlaec:v:60:y:2017:i:1:d:10.1007_s41027-017-0082-3 is not listed on IDEAS
    3. repec:laf:wpaper:201102 is not listed on IDEAS
    4. Michele Di Maio & Giorgio Fabbri, 2013. "Consumer boycott, household heterogeneity, and child labor," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(4), pages 1609-1630, October.
    5. Basu, Kaushik & Zarghamee, Homa, 2009. "Is product boycott a good idea for controlling child labor? A theoretical investigation," Journal of Development Economics, Elsevier, vol. 88(2), pages 217-220, March.
    6. Jean-Marie Cardebat & Alexandru Dimitrescu, 2011. "Social Responsibility of the countries and their international trade : A gravitational approach," Larefi Working Papers 1102, Larefi, Université Bordeaux 4.

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