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The Role of Trade and Offshoring in the Determination of Relative Wages and Child Labour

Author

Listed:
  • Alessandro Cigno
  • Giorgia Giovannetti
  • Laura Sabani

Abstract

Incorporating family decisions in a two-period.model of the world economy, we predict that trade liberalization raises the skill premium and reduces child labour in developing countries where the adult labour force is sufficiently well educated to attract production activities from abroad that will increase the demand for skilled relative to unskilled labour. Elsewhere, liberalization will reduce the skill premium, but it will not necessarily raise child labour. Our prediction is not rejected by the data, and it explains why child labour is negatively associated with trade openness in those developing countries where the labour force was relatively well educated when the liberalization took place, but not in the others.

Suggested Citation

  • Alessandro Cigno & Giorgia Giovannetti & Laura Sabani, 2017. "The Role of Trade and Offshoring in the Determination of Relative Wages and Child Labour," CESifo Working Paper Series 6549, CESifo.
    • Handle: RePEc:ces:ceswps:_6549
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp6549.pdf
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    Cited by:

    1. Oscar Afonso & Tiago Sequeira, 2023. "The Effect of Inflation on Wage Inequality: A North–South Monetary Model of Endogenous Growth with International Trade," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 55(1), pages 215-249, February.
    2. Alessandro Cigno, 2024. "Can a ban on child labour be self-enforcing, and would it be efficient?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(3), pages 1-15, September.
    3. Piriu, Andreea A., 2020. "Gender-Specific Effects of Import Competition on Individual Fertility Decisions," GLO Discussion Paper Series 713, Global Labor Organization (GLO).
    4. Andreea Alexandra Piriu, 2022. "Globalization and Gender‐Specific Patterns in Individual Fertility Decisions," Population and Development Review, The Population Council, Inc., vol. 48(1), pages 129-160, March.
    5. Cristian Ugarte & Marcelo Olarreaga & Gady Saiovici, 2023. "Child labour and global value chains," The World Economy, Wiley Blackwell, vol. 46(4), pages 941-968, April.
    6. Zhao, Liqiu & Wang, Fei & Zhao, Zhong, 2021. "Trade liberalization and child labor," China Economic Review, Elsevier, vol. 65(C).

    More about this item

    Keywords

    child labour; education; trade liberalization; skill endowments; skill premium;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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