Intra-industry trade and the demand for child labor

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1、InternationalJournalofEconomicTheorydoi:10.1111/ijet.12040Intra-industrytradeandthedemandforchildlaborKristianEstevez∗andTingLevyThispaperexaminestheroleoffirmheterogeneityinthedemandforchildlaborinanintra-industrytradesetting.Firmsdifferintheirproductivitylevelsandcanemploychildre

2、ninproducingaheterogeneousgood.Theeffectoftradeliberalizationwilldependonhowchangesinafirmsproductivityparameteraffectstherelativeproductivitybetweenadultsandchildren.Whentheproductivityelasticityofchildrenishigher(lower)thanthatofadults,tradeliberal-izationwillresultinanincrease(d

3、ecrease)inthedemandforchildlabor.Increasingtheriskofusingchildlaborwilldecreaseitsdemandinmostscenarios.Keywordschildlabor,firmheterogeneity,intra-industrytradeJELclassificationF1,J4,O1Accepted23October20131IntroductionThephenomenonofchildlaborisastubbornproblemthatcontinuestoplague

4、theleastdevelopedcountriesandcontributestotheperpetualcycleofpovertyfromwhichmanyhavebeenunabletoexit.Althoughtheincidenceofchildlaborhasbeenindeclineoverthepastfewdecades,itremainspersistentinthepoorestnations.Worldwideapproximately14percentofchildrenbetweenages5and14areeconomica

5、llyactive,butthepercentageofchildlaborersinAsiais17percent,andinsub-SaharanAfrica25percent,accordingtotheInternationalLabourOrganization(ILO2006).Researchonthecausesofchildlaborhasgrownoverthelast15years,albeitprincipallyrootedinonesideofthestory,namelythedecisionsofhouseholdsthat

6、determinethesupplyofchildlabor.1EdmondsandPavcnik(2005),DinopoulosandZhao(2007),Kis-Katos(2007),andEstevez(2011)areafewrecenttheoreticalpapersthathaveexaminedtheproblemofchildlaborfromthedemandside.Thisallowsfortheanalysisofhowtradeliberalization,foreigndirectinvestment,andotherpo

7、liciesaffectthedemandforchildlaborwhilecontrollingforsupplyfactors.Thesepapersassumethatchildrenworkinsectorsthatproducegoodsthataretradedinaninter-industrytradesetting.Indoingso,theyincorrectlyimplythatthewagespaidtochildren(orthechildrensguardian)reflecttheproductivityofthechildw

8、orker.AstudyconductedbytheILO(200