Child Labour and Social Exclusion

A four-good, four-factor general equilibrium trade-theoretic model is utilised that incorporates social exclusion, consumption disaggregation and child labour. In this framework, trickle-down economics fails and under very plausible conditions, socially excluded families and their children are impoverished by capital accumulation. Policies such as a ban on child labour have differential effects on the economy. Specifically, a ban on child labour in the traded goods sector necessarily improves the welfare of the socially excluded families and their children. However, a ban on child labour in the non-traded goods sector has ambiguous implications for the welfare of the excluded group. Thus, this paper highlights the importance of disaggregation and social exclusion for policymaking.