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THE EFFECTS OF GLOBALIZATION ON POVERTY AND CHILD LABOR

THE EFFECTS OF GLOBALIZATION ON POVERTY AND CHILD LABOR. Alicia Menendez The University of Chicago June 23, 2009. Agenda. Defining child labor Child labor data Causes of child labor Can globalization affect child labor? How? What evidence do we have?. Child Labor – Definitions.

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THE EFFECTS OF GLOBALIZATION ON POVERTY AND CHILD LABOR

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  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

  6. 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%)

  7. 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.

  8. 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)

  9. 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

  10. 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?

  11. 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)

  12. 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

  13. 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.

  14. It is not trade, it is poverty what creates child labor

  15. 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 Children’s Fund, Innocenti Research Centre, Florence, Italy

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