DP15426 Child Labour and Global Value Chains
We explore the impact the internationalization of production is having on child labour at the sector level, using data for 26 low- and middle-income countries. We find that sectors with stronger participation in foreign markets exhibit less child labour. Similarly, sectors that participate in global value chains by providing inputs to exporting firms in third countries (forward linkages) have fewer cases of child labour. On the other hand, sectors in which a large share of exports have foreign imported inputs embedded in them (backward linkages) experience higher incidences of child labour. Unlike the existing empirical literature on trade and child labour at the aggregate (country) level, which does not control for income effects, our results, at the sector level, do control for them.