Globalization, Inequality and Child Labour

Globalization, Inequality, and Child Labour By Amela Karabegovic Research Economist The Fraser Institute

Globalization, Inequality, and Child Labour

The Fraser Institute

Inequality

Child Labour

The Fraser Institute

An independent Canadian economic and social research and educational organization;

Offices in Vancouver, Calgary and Toronto;

Website: www.fraserinstitute.ca .

Globalization and Inequality

Poverty refers to the percentage of population living below a certain level of income;

Income Inequality refers to the distribution of income.

Income Inequality, 1998-2002 Least Free …….. Most Free Percent of income accruing to the Sources: The Fraser Institute; The World Bank, World Development Indicators CD- ROM, 2005.

Per Capita Income of Poorest 10% and Economic Freedom Least Free …….. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators CD-ROM, 2005.

Human Poverty Index, 2002, and Economic Freedom Quintile Least Free …………..…. Most Free Sources: The Fraser Institute; United Nations Development Programmme, Human Development Indicators 2004, available at http://hdr.undp.org/statistics/data/index_indicators.cfm (accessed on July 5, 2005).

Xavier Sala-i-Martin (2002). The Disturbing “Rise” of Global

Income Inequality. NBER Working Paper #W8904. NBER:

Cambridge, MA (April).

$1/day poverty rate has fallen from 20% to 5% over the last 25 years;

$2/day poverty rate has fallen from 44% to 18%;

There were about 400 million less poor people in late 1990s than there were in the 1970s.

Computed seven different, most popular measure of income inequality;

Conclusion: income inequalities have declined substantially during the last two decades;

“ [M]ost income inequalities in the world are explained by differences in per capita incomes across countries rather than differences within countries” (p. 39)

70% of world inequalities are across countries inequalities;

“ [t]he best strategy to reduce world inequalities is to induce aggregate economic growth in poor countries” (p. 39).

Berggren, Niclas (1999). Economic freedom and

equality: Friends or foes? Public Choice. Vol. 100,

203-223.

“ Increases in economic freedom influence equality measures positively” (p. 217)

Trade liberalization and financial deregulation mostly responsible for increases in equality.

Dollar, David and Aart Kraay (2004). Trade, Growth, and

Poverty. The Economic Journal. Vol. 114 (February), F22-F49.

Found no relationship between changes in trade volumes and changes in household income inequality;

Globalization leads to faster growth and poverty reduction in poor countries.

Litchfield, Julie and Patricia Justino (2004). Welfare in

Vietnam During the 1990s: Poverty, inequality and

poverty dynamics. Journal of the Asian Pacific Economy.

Vol. 9(2), 145-169.

Found substantial reductions in poverty in Vietnam during 1990s;

Some groups benefited more than others.

Conclusion

Income inequality has declined during the last two decades.

Globalization, on average, does not lead to increases in inequality.

Economic Freedom and Labor force, children 10-14 (% of age group) Least Free ……………. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators CD-ROM, 2005.

Child Labour

Amin, Shahina, M. Shakil Quayes, and Janet M. Rives (2004).

Poverty and Other Determinants of Child Labor in Bangladesh.

Southern Economic Journal. Vol. 70, No. 4.

“ [A] family’s poverty affects the probability that a child will work: keeping children away from work is a luxury these families cannot afford” (p. 876).

Child Labour