Intra-industry trade and the demand for child labor

摘要

This paper examines the role of firm heterogeneity in the demand for child labor in an intra-industry trade setting. Firms differ in their productivity levels and can employ children in producing a heterogeneous good. The effect of trade liberalization will depend on how changes in a firm's productivity parameter affects the relative productivity between adults and children. When the productivity elasticity of children is higher (lower) than that of adults, trade liberalization will result in an increase (decrease) in the demand for child labor. Increasing the risk of using child labor will decrease its demand in most scenarios.