Foreign Direct Investment, Child Labour and Unemployment of Unskilled Labour in a Dual Economy

Abstract

Using a three-sector specific-factor Harris-Todaro type general equilibrium model the paper demonstrates how an inflow of foreign capital might produce favourable effect on the incidence of child labour in a small open dual economy. The welfare of the working families is likely to improve due to the policy even though the urban unemployment situation of unskilled labour may not get better.Child labour, general equilibrium, Harris-Todaro model, foreign capital, return to education, wage inequality