Trade Liberalization in Agriculture in Developed Nations and Incidence of Child Labour in a Developing Economy

This paper is an attempt to analyse the consequence of trade liberalization in agriculture in the developed countries on the incidence of child labour in a developing economy in terms of a three‐sector general equilibrium model with informal sectors. Adult labour and child labour are substitutes for each other in the two informal sectors of the economy and are used together apart from capital in producing two exportable commodities. The interesting result that appears from the analysis is that agricultural trade liberalization in the developed countries may be effective in bringing down the incidence of child labour in the system. The paper substantiates the desirability of trade liberalization in agriculture in the developed nations from the perspective of the developing economies for reasons other than welfare improvement.     

MID‐DAY MEAL PROGRAM AND INCIDENCE OF CHILD LABOUR IN A DEVELOPING ECONOMY

The present paper purports to examine the consequence of a mid‐day meal program and/or cash stipend scheme on the incidence of child labour in a developing economy using a three‐sector general equilibrium model. It has been found that the policy may be counterproductive as it lowers both the initial incomes of the working families and the return on education. Direct cash payments to the working families instead of a mid‐day meal program are likely to be effective in eradicating the problem of child labour.     

The Intriguing Relation Between Adult Minimum Wage and Child Labour

Because most parents send their children to work when compelled by poverty, one would expect a rise in adult wage to lower child labour. However, if the rise in wage is achieved by a minimum wage law, its impact can be intriguing. It can, for instance, cause some adults to be unemployed and send their children to work, which in turn displaces more adult labour and sends more children to work. The paper solves this process and predicts the incidence of child labour. It shows that, for appropriate parametric configurations, child labour may fall or rise as the adult minimum wage is raised.     

Child Labour and Trade Liberalization

The paper analyses the implications of trade liberalization on the incidence of child labour in a two-sector general equilibrium framework. The supply function of child labour has been derived from the utility-maximizing behaviour of the working families. The paper finds that the effect of trade liberalization on the incidence of child labour crucially hinges on the relative factor intensities of the two sectors.     

Reduction of child poverty in Serbia: Benefit or employment strategy?

Based on the Serbian Survey of Income and Living Conditions (SILC) and tax benefits and structural microsimulation models, we evaluate the labour supply and distributive effects of several reform strategies concerning two major social transfers in Serbia: child allowance and social monetary assistance. Our results show that, in a context of a low labour participation rate, and high unemployment and informality rates, a benefit strategy is by far the more cost‐effective option for reducing child poverty than an employment strategy that aims to raise the work incentives for parents. Both proposed reforms are found to be progressive.     

Policy reform and labour demand in branches of Sri Lankan manufacturing industry

Many policy reforms in developing countries aim to remove factor market distortions. Whether such reforms reduce unemployment depends partly on the substitution possibilities between labour and other factors of production. This paper examines labour demand in seven branches of Sri Lankan manufacturing industry, using data on 4-digit industrial categories over the 1990 to 1997 period. The Box–Cox transformation is used to allow for flexible, and data-dependent, elasticities. The elasticity of capital–labour substitution varies widely across the branches of industry and is usually variable rather than constant. The average, long-run own-wage elasticity of labour demand for the manufacturing sector is estimated as ?0.80, so factor price policy should have an important effect on labour demand in this setting.     

Determinants of Child Labour in Indian States: Some Empirical Explorations (19612–1991)

This paper attempts to examine the phenomenon of child labour in India by conducting a preliminary search for the factors which affect demand and supply of child labour. The incidence of child labour is firstly examined with respect to the socio economie characteristics including dernographic, educational and economie poverty variables. Factor analysis is then conducted to identify patterns of these variables with the incidence of child labour for Indian states using Census data. These possible relationships are formally modelled in an overlapping generations framework which derives two postulated models. The models are estimated using Kmenta’s pooled method which combines variations due to time and state specific factors. These results clearly indicate the presence of vicious and virtuous spirals consisting of the above factors for different states. The supply factors appear to dominate and their roles require further indepth examination

     

Agricultural subsidy policies fail to deal with child labour under agricultural dualism: What could be the alternative policies?

We provide a theoretical explanation why agricultural subsidy policies are likely to fail to ensure simultaneous eradication of the incidence of child labour and improvement in the well-being of the poor working families in terms of a three-sector general equilibrium model with child labour and agricultural dualism. We identify both demand and supply side effects of any policy intervention on child labour. We also suggest two alternative policies, a scheme of direct cash transfer to poor people and economic growth through foreign direct investment (FDI), both of which would be effective in achieving these twin objectives of a welfare government.     

Age dependency and labour productivity divergence

This study finds strong empirical evidence in favour of the hypothesis that the age composition of population matters for labour productivity growth. We applied the fixed effects panel model using data on a large number of countries over the period 1980–2010. Our results suggest that higher age dependency not only directly impacts negatively on labour productivity but also modifies the impact of other determinants of labour productivity. Child dependency has a more adverse effect on labour productivity than old age dependency. We specifically find that the marginal effects of gross capital formation, information and communication improvement, and labour market reforms are significant at lower levels of age dependency. However, the marginal effect of savings on labour productivity is high at a high level of age dependency. The impact of age dependency varies between developed and developing economies. Diversity in the size and nature of age dependency across regions and different income groups help to explain the labour productivity differential across them.     

Bounded rationality,expectations, and child labour

This paper develops a model with overlapping generations, where the household's optimal fertility, child labour, and education decisions depend on the parents’ expectations or beliefs about the return to education. It is shown that there exists a range of parental income where the fertility rate is high and children participate in the labour market and receive an incomplete education if a parent believes the return to education is low. The act of participating in the labour market reduces the child's ability to accumulate human capital; thus, the action of sending a child into the labour market is sufficient to ensure that the parents’ initially pessimistic expectations are fulfilled. It is then shown that a one‐time policy intervention, such as banning child labour and mandatory education, can be enough to move a country from the positive child labour equilibrium to an equilibrium with no child labour.     

Development of the Slovenian Labour Market in 1996–2006 and the Main Challenges of Labour Market Policy

The labour market situation in Slovenia has improved in the last ten years, but some labour market problems persist. This article presents the labour market reforms carried out in the last ten years, which could be considered as partial. In order to make the labour market more flexible and to increase the job intensity of GDP growth, labour market reforms should be more comprehensive. The article identifies the main challenges of labour market policy and draws attention to some current and potential labour market problems in Slovenia.     

Growth effects of structural reforms in Southern Europe: the case of Greece,Italy, Spain and Portugal

This paper develops a semi-endogenous growth model for analysing the intertemporal effects of structural reforms in Southern European countries (Italy, Spain, Portugal and Greece). The model follows the product-variety paradigm in a semi-endogenous setting, and includes a disaggregation of labour into different skill groups. We use a comprehensive set of structural indicators in order to calibrate the model to important macroeconomic ratios and levels of productivity and employment. Our results show that structural reforms yield significant economic gains in the medium and long run. The results point to the importance of product market reforms and labour market related education and tax reforms as the most promising areas of structural policy interventions. This paper also argues for placing more emphasis on education policy which is key in upgrading the labour force, especially in these countries where the share of low skilled labour is among the highest in the euro area.     

Industrial Relations Reform: Chasing a Pot of Gold at the End of the Rainbow?

This article reviews the economy‐wide effects of the Work Choices and Fair Work reforms to Australia's industrial relations system. Outcomes examined are wages growth and earnings inequality, labour market adjustment, labour productivity growth and industrial disputes. Little evidence is found of an effect from the industrial relations reforms made in the 2000s. I argue that this is consistent with the nature of the reforms, being primarily oriented to distributive rather than efficiency goals. I finish by describing how private interest can explain current lobbying for further reform to Australia's industrial relations system.     

Economic liberalization, capital mobility and informal wage in a small open economy: A theoretical analysis

Empirical evidence suggests that the size of the informal sector in the developing countries has increased considerably during the liberalized economic regime. The present paper purports to analyze the consequences of economic reforms on the wellbeing of the informal sector workforce using a three-sector general equilibrium model with two informal sectors. The theoretical analysis finds that different liberalized policies produce diverse effects on the informal wage and that these results are independent of the nature of capital mobility between the informal and the formal sectors. It also shows that labour market reforms, contrary to the common wisdom, are likely to produce favourable effects on the informal wage.     

Labour Market Regulations and the Sectoral Reallocation of Workers: The Case of Trade Reforms

In this paper I highlight the importance of incorporating the institutional features of local labour markets into the analysis of trade reforms. A trade reform is often deemed beneficial because the elimination of trade barriers allows labour to reallocate towards those sectors in the economy in which the country has a comparative advantage. The amount and speed of the reallocation, however, and the post-reform behaviour of output, productivity and welfare, will depend on how regulated the labour market is. First, I document that high firing costs slow down the intersectoral reallocation of labour after a trade reform. Second, in order to isolate the effect of firing costs on labour reallocation, output and welfare after a trade reform, I build a dynamic general equilibrium model. I find that if a country does not liberalize its labour market at the outset of its trade reform, the intersectoral reallocation of workers will be 30% slower, and as much as 30% of the gains in real output and labour productivity in the years following the trade reform will be lost. From a policy standpoint, the message is that while trade reforms are desirable, they need to be complemented by labour market reforms in order to be fully successful.     

Labour‐market institutions and their impact on trade partners: A quantitative analysis

Recent theoretical literature studies how labour market reforms in one country can affect labour market outcomes in other countries, thereby rationalizing widely held policy beliefs and empirical evidence. But what is the quantitative relevance of such spillover effects? This paper combines two recent workhorse models: the canonical search‐and‐matching framework and the heterogeneous firms international trade model. Qualitatively, the framework confirms that labour market reforms in one country benefit its trading partners, replicating the stylized facts. However, when wages are bargained flexibly, the model quantitatively underestimates the correlation of structural unemployment rates across countries. Introducing some degree of real wage rigidity remedies this problem.     

The Spanish Labour Market: Reforms and consequences

The institutional design of the Spanish labour market has been subjected, during the last three decades, to permanent pressure fuelled by two beliefs. On the one hand, by the assumption that a higher degree of flexibility would help to reduce unemployment; on the other, by the assumption that such increased flexibility would also help to reduce inflation rates and, consequently, the inflation gap between Spain and the rest of the European countries. The recent history of the Spanish labour market is, therefore, the history of the reforms implemented to increase the flexibility in such a market. The aim of this paper is, firstly, to describe the main features of these reforms, showing the measures implemented in order to increase the flexibility in the labour market and, secondly, to show the degree of flexibility reached in the labour market. Finally, we will briefly analyse the macroeconomic consequences of these reforms.     

AGGREGATE EMPLOYMENT DYNAMICS AND (PARTIAL) LABOUR MARKET REFORMS

European labour markets have undergone several important innovations over the last three decades. Most countries have reformed their labour markets since the mid‐1990s, with the liberalization of fixed‐term contracts and temporary work agencies being the common elements to such reforms. This paper investigates the existence of a change in the dynamic behaviour of the aggregate employment for major European Union countries – France, Germany, Italy and Spain. According to our results, partial labour market reforms have made the response of the aggregate employment to output shocks larger and quite comparable to that found for the UK – the most flexible labour market in Europe since the Thatcher reforms.     

SOCIAL SECURITY REFORMS AND LABOUR FORCE PARTICIPATION OF THE ELDERLY IN JAPAN*

In the present study we examine how social security programs have affected the labour force participation of the elderly over the past 40 years in Japan. Using publicly available data, we construct incentive measures for inducing retirement, to ascertain actual changes in the generosity of the programs and to explore the impact of the reforms on the labour supply of the elderly. We show that the labour force participation of the elderly is significantly sensitive to the measures, and our counter‐historical simulations show that social security reforms since 1985 featuring reduced generosity have significantly encouraged the elderly to remain in the labour force longer.     

CHILD LABOUR IN VIETNAM

Abstract.  The paper tests the explanatory power of a theoretical model of household decisions about child labour and school enrolment and analyses the determinants of child labour in Vietnam, a country that is experiencing a rapid transition toward a market economy. The theoretical framework, used as a benchmark, is in the spirit of the 'new household' economics and links household decisions about schooling and child labour to intergenerational altruism and to human capital investment. On this basis, we analyse the evolution and determinants of child labour using two household surveys (1993 and 1998) for Vietnam.