How does globalisation affect child labour in developing countries? This study assesses the evidence in Vietnam. It also asks whether the use of trade sanctions on exports from developing countries to eradicate child labour is likely to be successful.

This paper by Dartmouth and the US National Bureau of Economic Research looks at the relationship between market integration and the incidence of child labour in poor, relatively unskilled labour-abundant economies through exploiting regional and inter-temporal variations in the relative price of an agricultural staple. Many globalisation opponents and trade policy-makers advocate that higher income countries employ trade sanctions to force domestic policies in poor countries to eradicate child labour.

Clearly, the effect of international market integration on local prices is very important. Integration lowers prices of import-competing goods and might have different implications for child labour in households associated with the production of an import-competing product. The impact on child labour of punitive trade sanctions against a country's exports depends on the distribution of the resources used in production of the exported goods.

The study finds that in Vietnam, increases in the relative price of rice result in a decline in child labour. A 30 per cent rise in the relative price of rice is associated on average with a 9 per cent decrease in child labour. Thus, rice price increases can account for 45 percent of the decline in child labour experienced in rural Vietnam between 1993 and 1998 and 47 per cent of the overall decline in Vietnam. However, child labour actually somewhat increases in urban areas where households are exposed to rice prices as consumers, but cannot take advantage of rice price increases as producers or agricultural day labourers.

In considering the mechanisms through which rice prices affect child labour, the paper suggests that:

• Most child (and adult) labour in poor, relatively unskilled labour-abundant economies occurs in either non-traded sectors or export-oriented sectors.
• Households better endowed with land experience larger reductions in child labour when rice prices increase.
• The incidence of child labour might also decline in households that do not own agricultural land, because higher rice prices are associated with higher (adult) agricultural wages.
• Additional income to land appears to be the dominant driving force behind the reductions in child labour.
• This additional household income to land benefits secondary school-aged girls the most in that their participation rates decline substantively and their school attendance increases dramatically.

This study has several implications for the policy debate on globalisation and child labour:

• The increased earning opportunities associated with globalisation, for children working in export-oriented sectors, do not necessarily lead to more child labour.
• Households appear to have taken advantage of higher income after the rice price increase to reduce child labour.
• Sanctions are likely to lower the price of the exported goods and so could instigate more, rather than less, child labour.
• Rice production is so widespread in Vietnam (most households produce rice directly or as hired labour) that lower prices of the exported goods associated with trade sanctions would affect most households.
• Integration leads to higher prices in the export sectors. The additional income from these price increases for Vietnamese households appears to be associated with a substantial reduction in child labour.

Source(s):
‘Does Globalization increase Child Labour?’ NBER Working Paper Series No 8760, by Eric Edmonds and Nina Pavcnik, 2002 Full document.

Funded by: Walter and Constance Burke Fund

id21 Research Highlight: 25 November 2002

Further Information:
Eric Edmonds/Nina Pavcnik
Department of Economics
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
USA

Contact the contributor: eric.edmonds@dartmouth.edu

Contact the contributor: nina.pavcnik@dartmouth.edu

Department of Economics, Dartmouth College, USA

Other related links:
'Will Child Labour decline with improvements in living standards?' from Edmonds

'The relationship between child labour and household production: Evidence from variation in sibling composition' from Edmonds

'Does Globalisation increase Child Labour? Evidence from Vietnam' from Edmonds

'Is Child Labour Inefficient? Evidence from Large Cash transfers' from Edmonds

'Indecent work and child or slave labour: human rights in the sustainable workplace'

ILO works for the progressive elimination of child labour worldwide

Save the Children is working to end exploitative child labour