#2016-054 Trade liberalisation and child labour in China
Liqiu Zhao, Fei Wang & Zhong Zhao
This paper exploits a quasi-natural experiment-the U.S. granting of
Permanent Normal Trade Relations (PNTR) to China after China's accession
to the World Trade Organization-to examine whether trade liberalisation
affects the incidence of child labour in China. PNTR permanently set
U.S. duties on Chinese imports at low Normal Trade Relations (NTR)
levels and removed the uncertainty associated with annual renewals of
China's NTR status. We find that the PNTR was significantly associated
with the rising incidence of child labour in China. A one percentage
point decrease in average export tariffs raises the odds of child labour
by a 1.3 percentage point. The effects are greater for girls, older
children, rural children, and children with less-educated parents. The
effect of trade liberalisation on the incidence of child labour,
however, disappears in the long run, because trade liberalisation can
induce exporters to upgrade technology and thus have less demand for
unskilled workers.
Keywords: Child labour, Trade liberalisation, Trade policy uncertainty,
Difference-in-differences, China
JEL classification: F14, F16