Globalization, Child Labour and Development Policies: A Theoretical Analysis

Abstract

Incidence of child labour is a disturbing feature of an emerging market economy. In the present article, we will try to explore whether globalization policies, namely, agricultural trade liberalization and methods aimed at attracting foreign direct investment (FDI), have had any negative impact on the incidence of child labour in a developing economy. We will also examine whether decrease in incidence of child labour would increase social welfare and welfare of the child labour-supplying family unambiguously. For our work, we use a three-sector general equilibrium structure. We intend to highlight that effects of globalization are crucially dependent on factor-intensity ranking and factor specificity. Multiple cross effects that are present in a three-sector general equilibrium structure are the driving forces behind the results.