Trade Sanctions and Child Labour: Quest for an Alternative Policy

Abstract

The paper is purported to examine the efficacy of trade sanctions in reducing the incidence of child labour in terms of a three-sector general equilibrium model with informal sectors and a non-traded intermediary. One of the two informal sectors produces a non-traded intermediary for the formal manufacturing sector. Child labour is used in the informal sectors and child labour and adult labour are perfect substitutes to each other in these sectors. The effect of trade sanctions on the incidence of child labour has been studied in this set-up. Also the outcome of a reduction in import tariff (trade liberalization policy) has been analyzed. The paper finds that under reasonable conditions trade sanctions may produce perverse effect on the incidence of child labour while a liberalized trade policy is effective in bringing down the prevalence of the evil in the system.