This paper examines the role of firm heterogeneity in the demand for child labor in an intraindustry trade setting. Firms differ in their productivity levels and can employ children in producing a heterogeneous good. The effect of trade liberalization will depend on how changes in a firm's productivity parameter affects the relative productivity between adults and children. When the productivity elasticity of children is higher (lower) than that of adults, trade liberalization will result in an increase (decrease) in the demand for child labor. Increasing the risk of using child labor will decrease its demand in most scenarios.

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Childhood Poverty is a multidisciplinary collection of articles and research that are associated with the Young Lives study, a long-term longitudinal project that examines short-run and long-run impacts of poverty and malnutrition on children's outcomes. The study follows two cohorts of children over 15 years of age in 4 countries (Ethiopia, Peru, Vietnam and India) with multiple surveys conducted at various stages of development, from early childhood to adulthood. A novel facet of the Young Lives program is the flexibility exhibited in using qualitative interviews with subsamples to provide context and adapt survey questions to the local population and current events. As such, in-depth and personal accounts of poverty from parents and children provide key insights into not only the risks that impoverished children face, but also how the children perceive themselves and their situation.With few exceptions, each chapter explores a new area of research and uses a variety of disciplines and methodologies. Some chapters are data heavy relying on their survey, whereas others are dependent on the qualitative interviews to provide an anthropological view of childhood poverty. The book also appropriately devotes an ample amount of time on the difficulties and challenges encountered on conducting research on social ills, in particular when they involve vulnerable children. The opening chapters outline the methodologies and guidelines used, the many challenges and ethical problems faced, and emphasize the need to be flexible to account for changes in circumstances faced by families that are participating in the study. The Young Lives study was meticulously prepared, going to such lengths as having gender-balanced teams in the field to ensure that children would be comfortable with the research teams as they aged. This first part of the book also outlines the different measures of poverty and the need to not rely on a single set of measures that corresponds to all groups (a point that is emphasized throughout the book). They also satisfactorily address the usual endogeneity problem when analyzing the relationship between household decisions and poverty measures. In fact, the use of a multidimensional process to correctly identify poor children, using various poverty indicators, also minimizes exclusion and inclusion errors of the sample cohorts.The rest of the book delves into the findings from the first few rounds of surveys and examines the experiences of poverty and the physical and psychological effect it has on children using the qualitative interviews. The second part supports and finds further Book Reviws 497 r

Abstract:In a closed (open) economy with a learning-by-doing externality in the manufacturing sector, Matsuyama (1992) found a positive (negative) link between the level of agricultural productivity and economic growth. We extend that framework by introducing a labor subsidy to induce industrialization. We make three contributions to the existing literature. First, we show that a comparative advantage in manufacturing is not a necessary condition for a small open economy to industrialize. Relative sectoral TFP growth determines whether the fraction of labor in manufacturing increases over time. Second, the timing of trade liberalization determines structural development and the use of a labor subsidy can allow a small open economy to industrialize early. Third, we analyze the labor subsidy when there is trade among two open economies. We find that there exists a unique subsidy which enables both economies to industrialize. Therefore, a country with a comparative advantage in producing the manufactured good could benefit from their trading partner using labor subsidies compared to not trading with them at all. JEL Codes: O13, O14, O41, F43.