Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/110162
Authors: 
Cigno, Alessandro
Giovannetti, Giorgia
Sabani, Laura
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 8878
Abstract: 
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.
Subjects: 
trade barriers
FDI
skill endowment
skill premium
school enrolment
child labour
JEL: 
D13
D33
F16
J13
J24
Document Type: 
Working Paper

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