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Study: Free trade cuts child labor
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February 7, 2002: 8:54 a.m. ET
Dartmouth researchers found easier Vietnamese rice trade reduced child labor.
By Staff Writer Mark Gongloff
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NEW YORK (CNN/Money) - Globalization could help reduce child labor in developing nations, according to a recent study by economists at Dartmouth College that studied the impact of rice prices on the rate of child labor in Vietnam.
Dartmouth economists, in a research paper posted this week on the Web site of the National Bureau for Economic Research, said a 30-percent increase in the price of Vietnamese rice between 1993 and 1998 -- the result of trade liberalization in that country -- likely led to a 9-percentage-point drop in the rate of child labor.
"Greater market integration, at least in this case, appears to be associated with less child labor," Dartmouth economists Eric Edmonds and Nina Pavcnik said.
"Our results suggest that the use of trade sanctions on exports from developing countries to eradicate child labor is unlikely to yield the desired income," they added.
In 1989, the Vietnamese government imposed a rice export quota that kept rice prices low relative to the global rice market. After that, however, it gradually began loosening restrictions until, in 1997, rice trade was fully liberalized and subject to global market prices. As a result, between 1993 and 1998, the price of Vietnamese rice jumped 29 percent.
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Terraced rice fields in Vietnam. Rice is Vietnam's major export and its primary staple. | |
During that same period, the rate of Vietnamese children between the ages of 6 and 15 working at least seven hours a day fell to 38 percent in 1998 from 57 percent in 1993, according to the Vietnam Living Standards Survey of 4,000 households.
But higher rice prices couldn't have directly led to all the reduction in child labor in Vietnam, Edmonds and Pavcnik pointed out, since families in urban areas had to pay more for rice without getting any of the benefit from higher rice prices that rice-growing families enjoyed.
Adjusting for such factors, Edmonds and Pavcnik estimated that higher rice prices accounted for about 45 percent of the drop in child labor between 1993 and 1998 -- in other words, about 1 million of the 2.2 million children who stopped working during that time did so simply because of higher rice prices.
The researchers believe their study is the first to compare prices with child labor rates.
Child labor is most prevalent in developing countries such as Vietnam, countries which also rely heavily on agriculture. In Vietnam, for example, 70 percent of the population worked in agriculture in 1993. And 70 percent of all Vietnamese farmland was dedicated to growing rice.
Many globalization opponents worry that the increased demand for products from developing nations will also increase wages for child workers, encouraging more families to send them to work.
But in Vietnam, which outlawed child labor in 1988, as higher rice prices led to higher household income for rural families, those families chose to send their children to school, using the extra income from higher prices to substitute for the child wages.
Older girls benefited most from this trend, the researchers found. The percentage of girls between the ages of 14 and 15 working at least seven hours a week fell to 70 percent in 1998 from 94 percent in 1993. Meanwhile, the percentage of older girls attending school jumped to 64 percent from 30.5 percent.
In July 2000, the United States and Vietnam signed an agreement opening up trade between them, although the Vietnamese government has said it cannot enjoy the full benefit of that agreement until it gains entry to the World Trade Organization.
A recent study by the World Economic Forum and a private research firm found that popular support for globalization -- usually defined as the opening of trade and cultural barriers between nations -- had surged following the Sept. 11 attacks.
But the WEF also pointed out that such support was tenuous and could plunge if globalization was proven to increase poverty or joblessness or hurt the environment. 
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