In this paper, we adapt the latest version of the Michigan Model of World Production and Trade to incorporate cross-border services trade and foreign direct investment (FDI). Firms are taken to be monopolistically competitive. Each firm produces products differentiated by the original R&D that defines the basic product and by location of production. Each firm faces a fixed cost in the country where production occurs, and sets an optimal mark-up for sales from each location. Firms locate production for export or for local consumption depending on the type of barriers faced. Barriers to trade in services take the form of an additional cost of employing variable capital and labor. We report the impact on welfare, trade, factor prices, sectoral output, economies of scale, and activities of multinationals following the introduction of national treatment of multinational firms in all countries.
There is a growing theoretical and empirical literature concerning the causes and consequences of child labor. The objective of this paper is to evaluate the policy initiatives targeted on child labor in light of the newly emerging theoretical argumentation and empirical evidence. We focus in particular on programs to address child-labor practices, and we attempt to evaluate these programs, given the empirical evidence concerning the primary determinants of when and why children work. Throughout, we find it instructive to evaluate the policies that have been adopted with the intent of reducing overall child labor in terms of the impact they are likely have on the welfare of children.
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