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Guaranteed Manufactured without Child Labor: The Economics of Consumer Boycotts, Social Labeling and Trade Sanctions

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  • Arnab K. Basu
  • Nancy H. Chau
  • Ulrike Grote

Abstract

Does labeling products "Child-Labor Free" provide a market-based solution to the pervasive employment of child labor? This paper explores the promise of social labeling in the context of its four oft-noted objectives: child labor employment, consumer information, welfare, and trade linkages, when competition between the North and South is based both on comparative cost advantage, and the use of child labor as a hidden product attribute. We show that (i) social labeling benefits consumers and Southern producers, whereas children and Northern producers are worse off; (ii) trade sanctions on unlabeled products deteriorates Southern terms of trade, but leaves the incidence of child labor strictly unaffected; and (iii) a threat to sanction imports of unlabeled Southern products discourages the South from maintaining a credible social labeling program. We also explore the question of whether social labeling should be viewed as a transitory or a permanent institution in developing economies. Copyright � 2006 The Authors; Journal compilation � 2006 Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of Development Economics.

Volume (Year): 10 (2006)
Issue (Month): 3 (08)
Pages: 466-491

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Handle: RePEc:bla:rdevec:v:10:y:2006:i:3:p:466-491

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Cited by:
  1. Basu, Kaushik & Zarghamee, Homa, 2009. "Is product boycott a good idea for controlling child labor? A theoretical investigation," Journal of Development Economics, Elsevier, vol. 88(2), pages 217-220, March.
  2. Doepke, Matthias & Zilibotti, Fabrizio, 2009. "Do International Labor Standards Contribute to the Persistence of the Child Labor Problem?," IZA Discussion Papers 4214, Institute for the Study of Labor (IZA).
  3. Michele Di Maio & Giorgio Fabbri, 2013. "Consumer boycott, household heterogeneity, and child labor," Journal of Population Economics, Springer, vol. 26(4), pages 1609-1630, October.
  4. Edmonds, Eric V., 2007. "Child Labor," IZA Discussion Papers 2606, Institute for the Study of Labor (IZA).
  5. Jean Marie Baland & Cedric Duprez, 2008. "Are Fair Trade Labels Effective Against Child Labor?," Working Papers id:1559, eSocialSciences.
  6. Hicks, Robert L. & Schnier, Kurt E., 2008. "Eco-labeling and dolphin avoidance: A dynamic model of tuna fishing in the Eastern Tropical Pacific," Journal of Environmental Economics and Management, Elsevier, vol. 56(2), pages 103-116, September.
  7. Baland, Jean-Marie & Duprez, Cédric, 2009. "Are labels effective against child labor?," Journal of Public Economics, Elsevier, vol. 93(11-12), pages 1125-1130, December.
  8. Chakrabarty, Sayan & Grote, Ulrike, 2009. "Child Labor in Carpet Weaving: Impact of Social Labeling in India and Nepal," World Development, Elsevier, vol. 37(10), pages 1683-1693, October.
  9. Kaushik Basu & Homa Zarghamee, 2008. "Product boycott a good idea for controlling child labor? A theoretical investigation," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 08-09, Indian Statistical Institute, New Delhi, India.
  10. Basu, Arnab K. & Hicks, Robert L., 2008. "Label Performance and the Willingness to Pay for Fair Trade Coffee: A Cross-National Perspective," Discussion Papers 44336, University of Bonn, Center for Development Research (ZEF).

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