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

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Author Info
Arnab K. Basu
Nancy H. Chau
Ulrike Grote

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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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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-9361.2006.00335.x
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Publisher Info
Article provided by Blackwell Publishing 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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  1. Matthias Doepke & Fabrizio Zilibotti, 2009. "Do International Labor Standards Contribute to the Persistence of the Child Labor Problem?," NBER Working Papers 15050, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Jean Marie Baland, 2008. "Are Fair Trade Labels Effective Against Child Labor?," Working Papers id:1559, esocialsciences.com. [Downloadable!]
    Other versions:
  3. 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. [Downloadable!]
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