The effects of globalization on child labor in developing countries

The effects of globalization on child labor in developing countries

Factors increasing child labour in developing countries as a result of globalisation

Although child labour shows a decreasing trend according to world statistics, detailed regional studies show some evidence about increases in child labour participation rates with economic growth in those regions. This paper looks at  the effects of globalisation on child labour in developing countries via cross-country analysis by decomposing globalisation to its components; foreign direct investment (FDI) and trade.

The paper finds that the relationship between child labour supply and GDP per capita (PCGDP) can be expressed as a U shape, as clarified in the findings.

Findings are:

  • child labour decreases among developing countries whose PCGDP’s are less than 7 500 USD
  • child labour increases in developing countries whose PCGDP levels are above 7 500 USD
  • the countries with high FDI penetration is associated with high levels of child labour participation rates
  • there is a negative association between openness to trade and the child labour

The authors conclude that the factors increasing child labour supply in developing countries have become more effective as a result of integration with global economy. Accordingly, they recommend the following:

  • economic growth, which is not sufficient to combat child labour problem in developing countries, should be supported with policies such as decreasing inequality in income distribution and poverty
  • more importance should be given to regulate labour market conditions in the case of increasing child labour participation rates