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Trade and Child Labor: A General Equilibrium Analysis

Author

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  • Subhayu Bandyopadhyay
  • Sudeshna C. Bandyopadhyay

Abstract

This paper augments the existing literature on trade and child labor by exploring the effects of terms-of-trade changes in the context of a three-good general equilibrium model, in which one of the goods is a nontraded good. We find that, under quasi-linear preferences, the effect of the terms of trade on child labor depends critically on the pattern of substitutability (or complementarity) in the excess demand functions between the export good and the nontraded good. We extend the analysis to the case in which factors move freely between the three goods, as in a Heckscher-Ohlin-type framework. Finally, we show that a balanced budget policy of taxing the education of skilled families to subsidize the education of unskilled families must reduce child labor without any effect on aggregate welfare.

Suggested Citation

  • Subhayu Bandyopadhyay & Sudeshna C. Bandyopadhyay, 2009. "Trade and Child Labor: A General Equilibrium Analysis," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 45(1), pages 5-18, January.
    • Handle: RePEc:mes:emfitr:v:45:y:2009:i:1:p:5-18
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    References listed on IDEAS

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    1. Edmonds, Eric V. & Pavcnik, Nina, 2006. "International trade and child labor: Cross-country evidence," Journal of International Economics, Elsevier, vol. 68(1), pages 115-140, January.
    2. Jean-Marie Baland & James A. Robinson, 2000. "Is Child Labor Inefficient?," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 663-679, August.
    3. Edmonds, Eric V. & Pavcnik, Nina, 2005. "The effect of trade liberalization on child labor," Journal of International Economics, Elsevier, vol. 65(2), pages 401-419, March.
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    Cited by:

    1. Biswajit Chatterjee & Runa Ray, 2016. "Impact of Trade vs. Non-trade Policies on the Incidence of Child Labour," Foreign Trade Review, , vol. 51(4), pages 287-297, November.
    2. 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.

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    More about this item

    Keywords

    child labor; nontraded goods; terms of trade; trade sanctions;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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