The determinants of child labour: the role of primary product specialization

The paper tests predictions of a traditional intra-household bargaining model which, under reasonable assumptions, shows that lack of bargaining power in the value chain significantly reduces the capacity for obtaining benefits from increased product demand arising from trade liberalization and therefore is positively associated with child labour. Cross-sectional and panel negative binomial estimates in a sample of emerging countries support this hypothesis. They show that proxies of domestic workers' bargaining power in the international division of labour (such as the share of primary product exports) are significantly related to child labour, net of the effect of traditional controls such as parental income, quality of education, international aid, and trade liberalization. The positive impact of the share of primary product exports on child labour outlines a potential paradox. The paradox suggests that trade liberalization does not always have straightforward positive effects on social indicators and that its short-run effects on income distribution and distribution of skills and market power across countries need to be carefully evaluated