Effect of Ban on Exports Containing Child Labour in a Dynamic Model in Presence of Imperfect Monitoring

Soumya Sahin and Ambar Nath Ghosh

Foreign Trade Review, 2016, vol. 51, issue 1, 26-45

Abstract: We build up a simple overlapping generations’ model where parents derive utility from their children’s education and use this framework to understand and analyze the implications of a ban on exports with child labour content. Since perfect monitoring seems unrealistic, we develop a model with imperfect monitoring. The export industry is competitive and therefore zero-profit condition holds. The country under consideration is assumed to be a small open economy and therefore faces a fairly elastic demand. Then, a ban on child labour imposed by the importing countries will increase the cost of employing child labour and will discourage the producers in that sector to use child labour. The final effect on the incidence of child labour will however depend on whether the aggregate supply of unskilled labour by child workers in the pre-ban equilibrium situation is greater or less than the demand for unskilled labour in the import-competing sector.

Keywords: Child labour; overlapping generations; imperfect monitoring (search for similar items in EconPapers)
JEL-codes: D10 F11 I22 J13 J20 J24 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:sae:fortra:v:51:y:2016:i:1:p:26-45

DOI: 10.1177/0015732515615259

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