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


  • Cigno, Alessandro

    () (University of Florence)

  • Giovannetti, Giorgia

    () (University of Florence)

  • Sabani, Laura

    () (University of Florence)


Incorporating family decisions in a two-period-model of the world economy, we show that trade liberalization may reduce child labour in developing countries where the initial share of skilled workers in the adult workforce – though not as large as in developed countries – is nonetheless large enough to attract skill-intensive FDI from the latter. If the production activities so relocated are more skill-intensive than those carried out in the destination countries before liberalization, that will in fact tend to offset the downwards pressure on the ratio of skilled to unskilled wage rates (Stolper-Samuelson effect), and thus on the incentive for parents to invest in their children's education, associated with international specialization. The hypothesis is not rejected by the data, and thus helps to explain why child labour has not risen in all developing countries, but risen in some and fallen in others.

Suggested Citation

  • Cigno, Alessandro & Giovannetti, Giorgia & Sabani, Laura, 2015. "The Role of Trade and Offshoring in the Determination of Child Labour," IZA Discussion Papers 8878, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp8878

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    Cited by:

    1. Alessandro Cigno, 2015. "Trade, foreign investment, and wage inequality in developing countries," IZA World of Labor, Institute of Labor Economics (IZA), pages 193-193, November.

    More about this item


    skill premium; skill endowment; FDI; trade barriers; school enrolment; child labour;

    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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