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Child Labor and Trade Liberalization in Indonesia

  • Kis-Katos, Krisztina

    ()

    (University of Freiburg)

  • Sparrow, Robert

    ()

    (Australian National University)

We examine the effects of trade liberalization on child work in Indonesia. Our estimation strategy identifies geographical differences in the effects of trade policy through district level exposure to reduction in import tariff barriers. We use a balanced panel of 261 districts, based on four rounds (1993 to 2002) of the Indonesian annual national household survey (Susenas), and relate workforce participation of children aged 10-15 to geographic variation in relative tariff exposure. Our main findings show that increased exposure to trade liberalization is associated with a decrease in child work among the 10 to 15 year olds. The effects of tariff reductions are strongest for children from low skill backgrounds and in rural areas. Favorable income effects for the poor, induced by trade liberalization, are likely to be the dominating effects underlying these results.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4376.

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Length: 52 pages
Date of creation: Aug 2009
Date of revision:
Publication status: published in: Journal of Human Resources, 2011, 46 (4), 722-749
Handle: RePEc:iza:izadps:dp4376
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  1. Hertel, Thomas W. & Maros Ivanic & Paul Preckel & John Cranfield, 2004. "The Earnings Effects of Multilateral Trade Liberalization: Implications for Poverty in Developing Countries," GTAP Working Papers 1208, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  2. Chiquiar, Daniel, 2008. "Globalization, regional wage differentials and the Stolper-Samuelson Theorem: Evidence from Mexico," Journal of International Economics, Elsevier, vol. 74(1), pages 70-93, January.
  3. Eric V. Edmonds & Nina Pavcnik, 2005. "Child Labor in the Global Economy," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 199-220, Winter.
  4. Edmonds, Eric V & Pavcnik, Nina & Topalova, Petia, 2008. "Trade Adjustment and Human Capital Investments: Evidence from Indian Tariff Reform," CEPR Discussion Papers 6772, C.E.P.R. Discussion Papers.
  5. Harrison, Ann (ed.), 2007. "Globalization and Poverty," National Bureau of Economic Research Books, University of Chicago Press, edition 0, number 9780226317946.
  6. Lisa Cameron, 2001. "The Impact Of The Indonesian Financial Crisis On Children: An Analysis Using The 100 Villages Data," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 37(1), pages 43-64.
  7. Ranjan, Priya, 2001. "Credit constraints and the phenomenon of child labor," Journal of Development Economics, Elsevier, vol. 64(1), pages 81-102, February.
  8. Robert Sparrow, 2007. "Protecting Education for the Poor in Times of Crisis: An Evaluation of a Scholarship Programme in Indonesia," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(1), pages 99-122, 02.
  9. Ann Harrison, 2007. "Globalization and Poverty," NBER Books, National Bureau of Economic Research, Inc, number harr06-1, August.
  10. Donald R. Davis & Prachi Mishra, 2007. "Stolper-Samuelson Is Dead: And Other Crimes of Both Theory and Data," NBER Chapters, in: Globalization and Poverty, pages 87-108 National Bureau of Economic Research, Inc.
  11. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
  12. Ann Harrison, 2007. "Globalization and Poverty: An Introduction," NBER Chapters, in: Globalization and Poverty, pages 1-32 National Bureau of Economic Research, Inc.
  13. Amiti, Mary & Konings, Jozef, 2005. "Trade Liberalization, Intermediate Inputs and Productivity: Evidence from Indonesia," CEPR Discussion Papers 5104, C.E.P.R. Discussion Papers.
  14. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  15. Ann Harrison & Margaret McMillan, 2007. "On the links between globalization and poverty," Journal of Economic Inequality, Springer, vol. 5(1), pages 123-134, April.
  16. Suryahadi, Asep & Suryadarma, Daniel & Sumarto, Sudarno, 2009. "The effects of location and sectoral components of economic growth on poverty: Evidence from Indonesia," Journal of Development Economics, Elsevier, vol. 89(1), pages 109-117, May.
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