An analysis of the impact of trade sanctions on the incidence of child labour

Although the incidence of child labour has declined in recent years in the aggregate, the experience of last fifteen years is not very satisfactory to achieve United Nations goal of ending child labour in all its forms by 2025. The purpose of this paper is to develop a general equilibrium model, with co-existence of both formal and informal sectors, to analyze the efficacy of trade sanctions and liberalized trade policy in reducing the incidence of child labour. Informal sectors use child labour to produce a non-traded intermediary for the tariff protected import competing formal sector. The analysis observes that instruments like liberalized trade policy improves child labour problem, though, under reasonable conditions trade sanctions may worsen the situation.