Trade Adjustment and Human Capital Investment: Evidence from Indian Tariff Reform

 
Author/Editor: Edmonds, Eric V. ; Pavcnik, Nina ; Topalova, Petia
 
Publication Date: April 01, 2007
 
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: Do the short and medium term adjustment costs associated with trade liberalization influence schooling and child labor decisions? We examine this question in the context of India's 1991 tariff reforms. Overall, in the 1990s, rural India experienced a dramatic increase in schooling and decline in child labor. However, communities that relied heavily on employment in protected industries before liberalization do not experience as large an increase in schooling or decline in child labor. The data suggest that this failure to follow the national trend of increasing schooling and diminishing work is associated with a failure to follow the national trend in poverty reduction. Schooling costs appear to play a large role in this relationship between poverty, schooling, and child labor. Extrapolating from our results, our estimates imply that roughly half of India's rise in schooling and a third of the fall in child labor during the 1990s can be explained by falling poverty and therefore improved capacity to afford schooling.
 
Series: Working Paper No. 07/94
Subject(s): Trade liberalization | India | Tariffs | Human capital | Education | Labor markets | Poverty reduction

Author's Keyword(s): Child labor | literacy | trade liberalization | India
 
English
Publication Date: April 01, 2007
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA2007094 Pages: 48
Price:
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