Import Restrictions, Capital Accumulation and Use of Child Labour: A General Equilibrium Analysis

Although there have been significant changes in the size and type of child labour used in different parts of the globe in recent years, the problem still remains quite serious and policy options are being debated in the literature on economic policy and development economics regarding the optimality or otherwise of alternative measures to combat child labour. One such important area of policy intervention could be the use of trade policy instruments to minimize the incidence of child labour particularly in developing countries. In this chapter, we have developed a general equilibrium framework for a less developed economy using child labour in one of its sectors, and we examine the effects of policies of import restriction and of domestic capital accumulation on the incidence or use of child labour in such an economy. The chapter concludes that the child labour problem in a less developed economy can be reduced by adopting policies favourable to economic growth through capital accumulation or by adopting a restrictive trade policy in the sector where child labour is not used. One is directly altering the use of child labour, while another is through changes in factor process. Thus, quantity effects and price effects are both important.