FDI and Child Labour

  • Sarbajit Chaudhuri
  • Ujjaini Mukhopadhyay


Concomitant to the disparate empirical evidences on how FDI impinges on the incidence of child labour in the developing world, the first part of this chapter in terms of two simple general equilibrium models with child labour and the informal sector aims at explaining why growth led by foreign capital has failed to lessen the gravity of the problem in some cases, while in general the incidence has declined in the developing countries in the liberalized regime. The latter part of it concentrates in identifying the different channels through which economic liberalization like increased FDI inflow can affect the child labour problem by constructing a three-sector HT-type general equilibrium model with endogenous skill formation. The analysis finds that reduction in poverty is not a necessary condition for improvement of the problem of child labour. FDI can mitigate the gravity of problem and improve welfare of each poor working family that supplies child labour even by raising the return to education and lowering the earning opportunities of children.


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Copyright information

© Springer India 2014

Authors and Affiliations

  • Sarbajit Chaudhuri
    • 1
  • Ujjaini Mukhopadhyay
    • 2
  1. 1.Department of EconomicsUniversity of CalcuttaKolkataIndia
  2. 2.Department of EconomicsBehala CollegeKolkataIndia

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