The impact of economic measures on child labor in an open dual economy

This paper investigates the impact of various economic measures on child labor in an open dual economy. We construct a small open economy model with heterogeneity of households in terms of location of residency and income. A part of households with low income supplies child labor when they reside in the rural area. The measures we will mainly consider are trade policies (e.g. import tariff and subsidy) and consumer boycott on child-labor-used products with various scopes of boycotts. Thesemeasures affect child labor supply through changes in 1) the proportion of rural population due to migration between rural and urban areas, 2) the overall income of household due to increase in the return to labor and endogenous supply of child labor, and 3) the cost of living. Depending on economic conditions, these three effects can explain different experiences of fighting efforts against child labor in developing countries.