Globalization reduces child labor

By CHRISTIAN BOURGE, UPI Think Tank Correnspondent  |  Feb. 25, 2002 at 1:54 PM
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WASHINGTON, Feb. 25 (UPI) -- Liberalized trade policy can lead to decreased child labor in developing countries, according to a recent study published by a think tank.

The study, "Does Globalization Increase Child Labor? Evidence From Vietnam," published by the National Bureau of Economic Research, an independent policy research organization, found that increased rice prices in Vietnam that resulted from the removal of export quotas during the 1990's lead to a significant decrease in overall child labor.

Given that many recent globalization efforts have focused on agricultural trade, the study highlights some of the key points in the debate surrounding worldwide trade liberalization.

The report's findings run counter to a belief long held by critics of trade liberalization -- that free trade would lead to increased demand for products from developing nations, which could further encourage families to send their young children to work in response to higher wages and higher demand for workers.

The report's authors, Dartmouth University economists Eric Edmonds and Nina Pavnick, found that the opposite was true: when Vietnamese parents could make more from the sale of the grain they grew, or received higher wages when picking it themselves, they chose to keep their children out of the rice fields.

"We went in thinking that we would see big increases in child labor related to increases in money to be made," Edmonds told United Press International. "But we were surprised to see the opposite."

The gradual loosening of Vietnam's rice quotas began in 1989 and lead to the full liberalization of the rice trade by 1997, when the price of rice became fully based upon global market trends. As result of these efforts, the price of rice increased 29 percent between 1993 and 1998.

Through a mathematical analysis of the Vietnam Living Standards Survey of 4,000 households, Edmonds and Pavnick found that in these years the rise in the relative price of rice (adjusted for other contributing factors) produced an average decrease in child labor of 9 percent. Price increases could also be shown to have provided a 45-percent decline in the incidence of child labor in rural areas of the country (around 1 million fewer children working), and a 47-percent decline in the country as a whole, or 2.2 million fewer children working.

Among children who did work, the rate workweeks of seven hours or longer fell from 57 percent in 1993 to 38 percent by 1998.

Surprisingly for the researchers, older girls received a greater portion of the gains: the percentage of 14- and 15-year olds working at least seven hours a week decreased from 94 percent in 1993 to 70 percent in 1998. At the same time, the percentage of girls attending school more than doubled, increasing to 64 percent from 30.5 percent. This overall trend in increased school attendance was seen in both sexes across age levels.

It should be noted, however, that child labor actually increased slightly in urban areas where families were unable to directly benefit from the increase in rice prices.

The findings confirmed a long-held belief among several researchers who follow global trade policy-that at the macro level, people given the economic opportunity will choose school above work for their children.

Aaron Schavey, a free trade advocate and a policy analyst with the Heritage Foundation's Center for Trade and Economics, said the study confirms that for those in the developing world, child labor is function of economic necessity.

"I thought this was a great study," Schavey told UPI. "What I think it shows is that when child labor occurs, it does not always occur by choice. It occurs out of necessity. Parents don't want to send their children into the work force but will do so when it means getting the next meal on the plate."

Schavey added that the study proves that countries need to strive to expand their economies through free trade.

"The primary determinant of labor standards in a country is economic growth," he said. "Therefore the best way to raise labor standards is for a country to grow, and the best way for a country to grow is through trade liberalization."

Edmond cautioned, however, that the study could not be used to categorically state that integration into international markets would lead to decreased child labor worldwide, but that it only points to a positive correlation between decreased child labor and liberalized trade policies.

In addition, it should be noted the Vietnam had several factors working in the favor of decreasing child labor, including the type of liberalization undertaken, the generally equitable distribution of land, and the pervasiveness of rice as a crop. The extent of rice farming there provides enough to meet the country's internal demand, as well as to feed export demand.

Edmonds cited countries like Thailand, China and India, where there are a large number of households engaged in rice cultivation, as places where the positive results of liberalization would also be generally diffused to child labor.

He also noted that in countries, where the production of major agricultural products is much more concentrated--such as in Latin American economies and African coffee-producing nations, or in Brazil, where subsistence farming is typical -- the correlation would not be nearly as pronounced. Trade liberalization for a given product might not affect the average farmer in such places, he said.

"I can think of lots of countries where, if agricultural markets were liberalized, the benefits would not be distributed in the population," he said. "If trade integration raises the price in these countries, and that is a big "if," I wouldn't expect the average household to directly benefit."

Edmonds noted, however that there is a great deal of international research that shows that overall living standards improve when countries liberalize and increase trade.

Edward Gresser, director of the Progressive Policy Institute's Project on Trade and Global Markets, said that the NBER report highlights a key point that is often lost in the debate over how western nations should respond to the issue: child laborers are not usually doing factory related work.

"The typical image is a child worker in a factory, and that is not a typical child worker at all," he said. "But for some reason, probably visibility and because factory-based labor seems to be much more painful than rural and farm based labor, this is the perception."

Edmonds pointed out that one of the major values of the study is that it backs up earlier findings that child laborers usually are working for their families. He cited International Labor Organization estimates that at least 250 million children worldwide are working and only about 3 percent of them work outside of the home.

Nancy Birdsall, founding president of the Washington-based Center for Global Development, and a former executive vice-president of the Inter-American Development Bank, also agreed with the study findings.

She noted that it raised broader issues about current U.S. trade policy, and about efforts by child labor advocates to promote sanctions or other negative enforcement methods to end child labor.

"It is very difficult to end child labor in any direct way by legislation or by regulation," Birdsall said.

Critics of sanctions have long argued that they actually lower household incomes in developing nations by hurting export sales and driving down agricultural and craft sector earnings, which are often prime revenue sectors in such countries.

Sanctions may actually reinforce the need for children to work for their families, critics of such policies say.

Birdsall also said that protectionist trade policies for textiles and some agricultural imports might lead to higher levels of child labor by limiting economic development.

"It is compounding the downside of globalization that the United States has quotas against products like clothing, which are the source of jobs for the poor in developing countries, she said. "We import rice from Vietnam, but we don't import much more than apparel from Mozambique and Pakistan or other parts of the world, where the only chance to cling to the economic ladder is through textile, clothing and agriculture jobs."

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