Impact of Restrictive Trade Policy on Adult Unemployment, Welfare and the Incidence of Child Labour -A Three Sector General Equilibrium Analysis
This paper considers a three sector competitive general equilibrium model of a small open, less developed economy suffering from unemployment problem in the adult labour market on the one hand, and from the existence of employment of child labour on the other . The economy is divided into one rural, and two urban sub-sectors. Four inputs are used in the model among which three are – sector specific in nature. The representative adult worker in this model not only supplies his own labour ,but also sends his children out to work. Factor market distortion in this model is captured by the existence of a factor price differential between urban and rural sectors. The model is used to analyze the effect of imposition of tariff protection in import competing sector on the unemployment of adult workers on the one hand , and on the incidence of child labour supply on the other. An interesting result of the present exercise is that the supply of child labour moves in the opposite direction to the level of unemployment in the adult labour market as the tariff rate protection in import competing sector changes. This result runs counter to the existing view that unemployment in the adult labour market is one of the important causes for the existence of child labour market.
Volume (Year): 8 (2010)
Issue (Month): 1 (January)
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