Foreign Capital, Return to Education and Child labour

Dwibedi, Jayanta and Chaudhuri, Sarbajit (2007): Foreign Capital, Return to Education and Child labour.

Abstract

This paper attempts to identify the different channels through which economic reforms can affect the incidence of child labour in a developing economy. Using a three-sector general equilibrium model it shows that inflows of foreign capital can lower the problem of child labour by raising the return to education and reducing the earning opportunities of children. It demonstrates how foreign capital produces favourable effect on the incidence of child labour although it affects wage inequality adversely.

• Item Type: MPRA Paper
• Institution: University of Calcutta
• Language: English
• Keywords: Child labour; general equilibrium; foreign capital; return to education; wage inequality
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements

References

Chaudhuri, S. and S. Yabuuchi, in press, Economic liberalization and wage inequality in the presence of labour market imperfection, International Review of Economics and Finance. Cigno, A., F. C. Rosati, and L. Guarcello, 2002, Does globalisation increase child labour?, World Development 30(9), 1579-1589. Jones, R.W. and P. Neary, 1984, Positive theory of international trade, in: R.W. Jones and P. B. Kenen, eds., Handbook of Development Economics, Vol. 1 (North-Holland, Amsterdam) 1-62. Khan, A.R., 1998, The impact of globalization in South Asia, in: A.S. Bhalla ed., Globalization,Growth and Marginalization (Macmillan, UK). Neumayer, E. and I. Soysa, 2005, Trade openness, foreign direct investment and child labor, World Development 33(1), 43-63. Ranjan, P., 1999, An economic analysis of child labour, Economic Letters 64, 99-105. Robbins, D., 1996, HOS hits facts: facts win: evidence on trade and wages in developing world, DP No. 557(Harvard University). Tendulkar, S., D.K. Sundaram, and L.R. Jain, 1996, Macroeconomic Policies and Poverty in India 1966-67 to 1993-94, Manuscript (ILO, New Delhi.). Wood, A., 1997, Openness and wage inequality in developing countries: the Latin American challenge to East Asian conventional wisdom, World Bank Economic Review 11(1), 33-57.