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THE EFFECTS OF GLOBALIZATION ON POVERTY AND CHILD LABOR

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Child employed in the production of a good that will be sold on the market ... Economically active child under 12 that works 1 or more hours per week ... – PowerPoint PPT presentation

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Title: THE EFFECTS OF GLOBALIZATION ON POVERTY AND CHILD LABOR


1
THE EFFECTS OF GLOBALIZATION ON POVERTY AND CHILD
LABOR
  • Alicia Menendez
  • The University of Chicago
  • June 23, 2009

2
Agenda
  • Defining child labor
  • Child labor data
  • Causes of child labor
  • Can globalization affect child labor? How?
  • What evidence do we have?

3
Child Labor Definitions
  • Child employed in the production of a good that
    will be sold on the market
  • Economic activities deleterious to the well-being
    of children.
  • UNICEF
  • Ages 5-11 At least one hour of economic work or
    28 hours of domestic work per week. Ages 12-14
    At least 14 hours of economic work or 28 hours of
    domestic work per week. Ages 15-17 At least 43
    hours of economic or domestic work per week.

4
Child Labor Definitions
  • ILO's Statistical Information and Monitoring
    Program on Child Labor (SIMPOC) Definition
  • Economically active child under 12 that works 1
    or more hours per week
  • Economically active child 14 and under that works
    at least 14 hours per week or 1 or more hours per
    week in activities that are "hazardous by nature
    or circumstance,"
  • A child 17 and under that works in an
    "unconditional worst form of child labor"
    (trafficked children, children in bondage or
    forced labor, armed conflict, prostitution,
    pornography, illicit activities, ILO 2002).
  • The ILO (2006a) estimates that there were 218
    million child laborers in the world in 2004 under
    this definition.

5
Data
  • 2000-2001 UNICEF Surveys in 36 low income
    countries to assess working status of children
    5-14 (124 million children)
  • 25 participate in market work.
  • Low levels of wage employment.
  • Most of the market work is family work
  • Higher participation at older ages
  • Higher levels in rural than urban areas

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7
  • Most children work in agriculture with their
    families
  • Agriculture Nepal 85
  • Ethiopia 89
  • Pakistan 67
  • Guatemala 63
  • Domestic work is important. Most children in
    these countries perform domestic tasks (65)

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11
  • What determines whether a child works or not?
  • Living Standards
  • When household income increases, child labor is
    reduced
  • Child labor is not desirable. Children work only
    if consumption drops below a minimum level. As
    income grows we can expect children to work less
  • As income grows marginal contribution of child
    income is smaller
  • Higher income can buy substitutes for child
    labor
  • Higher income can make investments in children
    more attractive.

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13
  • The negative relation between income and child
    labor is also present at the country level.
  • There is also evidence of the negative relation
    between income and child labor at the household
    level. (Examples from Tanzania, Philippines,
    Vietnam, etc. that follow household overtime)

14
Can globalization affect child labor?
  • Main mechanisms
  • 1) Suppose that globalization increases labor
    demand
  • Working can be more attractive
  • Increasing employment and earnings opportunities
    can increase child labor directly or indirectly
    by increasing employment for the parents and
    forcing children to perform household activities
  • But it is less necessary
  • Increasing employment and earnings opportunities
    can decrease child labor by improving earnings of
    parents

15
  • 2) Suppose that globalization decreases labor
    demand
  • Working is less attractive
  • Reduced employment and earnings opportunities
    can decrease child labor directly or indirectly
    by decreasing employment for the parents and
    freeing children from performing household
    activities
  • But it is more necessary
  • Decreasing employment and earnings opportunities
    can increase child labor by reducing earnings of
    parents
  • Some sectors might be positively affected
    (increasing labor demand) while others might
    suffer from globalization (decreasing labor
    demand). What is the net effect?

16
Empirical Evidence
  • What prevails? What does the empirical evidence
    indicate?
  • Exposure to international trade does not appear
    to encourage child labor. On the contrary, higher
    foreign trade appears to be associated with a
    lower incidence of child labor (HARNESSING
    GLOBALISATION FOR CHILDREN A report to UNICEF,
    Chapter 6)
  • Cross-country data do not substantiate assertions
    that trade per se plays a significant role in
    perpetuating the high levels of child labor that
    pervade low-income countries (Edmonds and
    Pavcnik, 2004)

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18
Liberalization of rice markets in VietnamEdmonds
and Pavcnik
  • Vietnam in the 1990s. Elimination of quotas that
    restricted exports of rice and liberalization of
    rice markets. Price of rice went up 30
  • Rice production larger employer of adults and
    children. 70 of households is involved in the
    production of rice.
  • 26 of children 6 to 15 worked in agriculture
    (mostly rice production).
  • Rice trade associated with higher wages for both
    adults and children
  • Rice price increase accounts for 45 of the
    decline in child labor. Children in households
    that are large net rice producers experienced the
    largest declines of child labor, while child
    labor increased in household that are large
    consumers of rice

19
  • Income effect reducing child labor. As households
    leave poverty their children stop working.
  • In general this seems to be the effect that
    prevails but
  • we saw that this does not need to be the
    outcome. Kruger studies coffee booms in Nicaragua
    and Brazil. In the case of Nicaragua, labor
    demand goes up but the income effect on the
    families is not large enough to take children out
    of the labor force. In the case of Brazil the
    boom was seen (correctly) as short lived.
  • We need many more of these rigorous studies.

20
  • It is not trade, it is poverty what creates
    child labor

21
  • This lecture follows extensively the research
    work of Professor Eric Edmonds an expert in child
    labor.
  • Edmonds, E and N. Pavcnik (2006) Trade
    Liberalization and the Allocation of Labor
    between Households and Markets in a Poor
    Country, Journal of International Economics,
    July 2006, 69(2), 272-295
  • Kruger, D. (2007). "Coffee production effects on
    child labor and schooling in rural Brazil,"
    Journal of Development Economics 82(2), March
    2007,448-463
  • Edmonds, E. and N. Pavcnik (2006). "International
    Trade and Child Labor Cross-Country Evidence,
    Journal of International Economics 68 (1),
    January 2006, 115-140
  • HARNESSING GLOBALISATION FOR CHILDREN A report
    to UNICEF, edited by Giovanni Andrea Cornia,
    UNICEF, United Nations Childrens Fund, Innocenti
    Research Centre, Florence, Italy
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