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

By Eric V. Edmonds, Nina Pavcnik, Petia Topalova

April 1, 2007

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Eric V. Edmonds, Nina Pavcnik, and Petia Topalova. Trade Adjustment and Human Capital Investments: Evidence from Indian Tariff Reform, (USA: International Monetary Fund, 2007) accessed December 3, 2024

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.

Subject: Education, Employment, Labor, Population and demographics, Tariffs

Keywords: District tariff, Schooling cost, Tariff change, WP

Publication Details

Pages:

48
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2007/094
Stock No:

WPIEA2007094
ISBN:

9781451866582
ISSN:

1018-5941

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