The Effect of FDI on Child Labor

Ronald Davies and Annie Voy ()

University of Oregon Economics Department Working Papers from University of Oregon Economics Department

Abstract: This paper examines the extent to which foreign direct investment (FDI) affects child labor. Using 1995 data for 145 countries, we find that, contrary to common fears, FDI is negatively correlated with child labor. This effect, however, disappears when controlling for per capita income. After doing so, we find no robust effect of either FDI or international trade on child labor. This result is robust to corrections for the endogeneity of FDI, trade, and income. Furthermore, this result is confirmed when using data from earlier years and when using fixed effects. This suggests that the impact of FDI and trade on child labor, if any, is the increases in income they generate.

Keywords: Child Labor; Foreign Direct Investment; International Trade (search for similar items in EconPapers)
JEL-codes: F14 F16 F23 (search for similar items in EconPapers)
Pages: 33
Date: 2006-10-01, Revised 2007-02-01
New Economics Papers: this item is included in nep-dev and nep-int
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http://economics.uoregon.edu/papers/UO-2007-4_Davies_Child_Labor.pdf (application/pdf)

Related works:
Journal Article: The effect of FDI on child labor (2009)
Working Paper: The Effect of FDI on Child Labor (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ore:uoecwp:2007-4

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