IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/72804.html

Child Labor and FDI: Evidence from Vietnam

Author

Listed:
  • Olarreaga, Marcelo
  • Piacentini, Mario
  • Nguyen, Cuong

Abstract

The objective of this paper is to provide evidence regarding the impact of FDI on child labor in Vietnam. Starting with the reforms in the late 1980s Vietnam experienced an economic boom which led to an important decline in poverty and child labor. The 2000 decade witnessed a drastic acceleration of the structural transition away from agriculture. In this paper we merge repeated household surveys and enterprise censuses to explore the contribution of foreign firms to the decline in child labor. We find that while higher demand for labor by domestic firms tends to increase child labor, the entry of FDI in both the manufacturing and services sectors have contributed to reduce the labor supply of children. The impact of FDI in the service sector has so far been smaller than in manufacturing. This is partly due to the fact that FDI into the services sector has been limited, more capital-intensive and concentrated in the richest provinces, but also perhaps to the fact that manufacturing firms may be more easily targeted by trade policy in the rest of the world or consumer boycotts associated with child labor.

Suggested Citation

  • Olarreaga, Marcelo & Piacentini, Mario & Nguyen, Cuong, 2010. "Child Labor and FDI: Evidence from Vietnam," MPRA Paper 72804, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:72804
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/72804/1/MPRA_paper_72804.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Nguyen Viet Cuong, 2011. "Can Vietnam Achieve The Millennium Development Goal On Poverty Reduction In High Inflation And Economic Stagnation?," The Developing Economies, Institute of Developing Economies, vol. 49(3), pages 297-320, September.
    2. T. Paul Schultz & John A. Strauss (ed.), 2008. "Handbook of Development Economics," Handbook of Development Economics, Elsevier, edition 1, volume 4, number 5.
    3. Nicita, Alessandro, 2006. "Export led growth, pro-poor or not? Evidence from Madagascar's textile and apparel industry," Policy Research Working Paper Series 3841, The World Bank.
    4. Davies, Ronald B. & Voy, Annie, 2009. "The effect of FDI on child labor," Journal of Development Economics, Elsevier, vol. 88(1), pages 59-66, January.
    5. Basu, Kaushik & Das, Sanghamitra & Dutta, Bhaskar, 2010. "Child labor and household wealth: Theory and empirical evidence of an inverted-U," Journal of Development Economics, Elsevier, vol. 91(1), pages 8-14, January.
    6. Basu, Kaushik & Zarghamee, Homa, 2009. "Is product boycott a good idea for controlling child labor? A theoretical investigation," Journal of Development Economics, Elsevier, vol. 88(2), pages 217-220, March.
    7. Lipsey, Robert E. & Sjoholm, Fredrik, 2004. "Foreign direct investment, education and wages in Indonesian manufacturing," Journal of Development Economics, Elsevier, vol. 73(1), pages 415-422, February.
    8. Bruce A. Blonigen & Ronald B. Davies & Glen R. Waddell & Helen T. Naughton, 2019. "FDI in Space: Spatial Autoregressive Relationships in Foreign Direct Investment," World Scientific Book Chapters, in: Foreign Direct Investment, chapter 2, pages 55-88, World Scientific Publishing Co. Pte. Ltd..
    9. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Heather Congdon Fors, 2012. "Child Labour: A Review Of Recent Theory And Evidence With Policy Implications," Journal of Economic Surveys, Wiley Blackwell, vol. 26(4), pages 570-593, September.
    2. Congdon Fors, Heather, 2024. "Child Labour Background, Challenges, and the Role of Research in Achieving Sustainable Development Goal 8.7," Working Papers in Economics 840, University of Gothenburg, Department of Economics.
    3. Zhao, Liqui & Wang, Fei & Zhao, Zhong, 2016. "Trade liberalisation and child labour in China," MERIT Working Papers 2016-054, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Matthias Doepke, 2013. "Exploitation, altruism, and social welfare," Politics, Philosophy & Economics, , vol. 12(4), pages 375-391, November.
    5. Michele Di Maio & Giorgio Fabbri, 2013. "Consumer boycott, household heterogeneity, and child labor," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(4), pages 1609-1630, October.
    6. Hoekman & Bernard & Winters, L. Alan, 2005. "Trade and employment : stylized facts and research findings," Policy Research Working Paper Series 3676, The World Bank.
    7. Tang, Can & Zhao, Liqiu & Zhao, Zhong, 2018. "Child labor in China," China Economic Review, Elsevier, vol. 51(C), pages 149-166.
    8. 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.
    9. Schäffler, Johannes & Hecht, Veronika & Moritz, Michael, 2014. "Regional determinants of German FDI in the Czech Republic : evidence from a gravity model approach," IAB-Discussion Paper 201403, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    10. J. Eduardo Ibarra-Olivo & Thomas Neise & Moritz Breul & Jöran Wrana, 2024. "FDI and human capital development: a tale of two Southeast Asian economies," Journal of International Business Policy, Palgrave Macmillan, vol. 7(3), pages 314-336, September.
    11. Long Thanh Giang & Cuong Viet Nguyen & Tuyen Quang Tran & Vu Thieu, 2017. "Does Firm Agglomeration Matter to Labor and Education of Local Children? Evidence in Vietnam," Child Indicators Research, Springer;The International Society of Child Indicators (ISCI), vol. 10(4), pages 1015-1041, December.
    12. Fabre, Alice & Pallage, Stéphane, 2015. "Child labor, idiosyncratic shocks, and social policy," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 394-411.
    13. Octavio Escobar, 2011. "The location pattern of FDI in Mexico after NAFTA," ERSA conference papers ersa10p804, European Regional Science Association.
    14. Michalak, Katja & Naqvi, Nadeem, 2019. "Child Labor: Theory of Foreign Trade and Investment Intervention," MPRA Paper 94497, University Library of Munich, Germany.
    15. Moana S. Simas & Laura Golsteijn & Mark A. J. Huijbregts & Richard Wood & Edgar G. Hertwich, 2014. "The “Bad Labor” Footprint: Quantifying the Social Impacts of Globalization," Sustainability, MDPI, vol. 6(11), pages 1-27, October.
    16. Kien Trung Nguyen, 2014. "The impact of trade and investment liberalization on the wage skill premium: evidence from Vietnam," Departmental Working Papers 2014-20, The Australian National University, Arndt-Corden Department of Economics.
    17. Seçil Hülya Danakol & Saul Estrin & Paul Reynolds & Utz Weitzel, 2017. "Foreign direct investment via M&A and domestic entrepreneurship: blessing or curse?," Small Business Economics, Springer, vol. 48(3), pages 599-612, March.
    18. Sushobhan Mahata & Jonaki Sengupta & Ranjanendra Narayan Nag, 2021. "Child Labour and Trade-Related Price Policies in a Developing Economy: A Trade-Theoretical Analysis," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 64(3), pages 685-704, September.
    19. Zaiyang Li & Hassan Swedy Lunku & Shaohua Yang & Agus Salim, 2024. "The dynamic interplay of foreign direct investment and education expenditure on Sub-Saharan Africa income inequality," International Economics and Economic Policy, Springer, vol. 21(3), pages 593-616, July.
    20. Donaubauer, Julian & Herzer, Dierk & Nunnenkamp, Peter, 2012. "Does aid for education attract foreign investors? An empirical analysis for Latin America," Kiel Working Papers 1806, Kiel Institute for the World Economy (IfW Kiel).

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:72804. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.