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Are Fair Trade Labels Effective Against Child Labour?

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  • Baland, Jean-Marie
  • Duprez, Cédric

Abstract

In this paper, we develop a model of North-South trade to analyze the impact of a label certifying the absence of child labour in the export production of the South. When most eligible producers in the South can obtain the label, its impact is considerably reduced by a displacement effect whereby adult workers replace children in the export sector while children replace adults in the domestic sector. The label is then unable to create a price differential between goods produced under the label and those produced without it. When only a small fraction of eligible producers have access to the label, so that the South exports both labelled and unlabelled production to the North, labelled producers generally gain while those without a label generally loose from the introduction of the label. Ex ante welfare may thus fall in the South if the probability of getting a label when one qualifies is small. The impact on child labour is in general ambiguous, as the reaction of child labour to higher or lower adult and children wages depends on the strength of income and substitution effects.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6259.

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Date of creation: May 2007
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Handle: RePEc:cpr:ceprdp:6259

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Keywords: child labour; fair trade; label;

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References

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  1. Saqib Jafarey & Sajal Lahiri, 1999. "Will trade sanctions reduce child labour? The role of credit markets," Economics Discussion Papers 500, University of Essex, Department of Economics.
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  14. Basu, Kaushik, 2003. "Policy Dilemmas for Controlling Child Labor," Working Papers 03-11, Cornell University, Center for Analytic Economics.
  15. Canagarajah, Sudharshan & Nielsen, Helena Skyt, 1999. "Child labor and schooling in Africa : a comparative study," Social Protection Discussion Papers 20456, The World Bank.
  16. Drusilla K. Brown, 1999. "Can Consumer Product Labels Deter Foreign Child Labor Exploitation?," Discussion Papers Series, Department of Economics, Tufts University 9919, Department of Economics, Tufts University.
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  19. Arnab K. Basu & Nancy H. Chau & Ulrike Grote, 2006. "Guaranteed Manufactured without Child Labor: The Economics of Consumer Boycotts, Social Labeling and Trade Sanctions," Review of Development Economics, Wiley Blackwell, vol. 10(3), pages 466-491, 08.
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Citations

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Cited by:
  1. Matthias Doepke & Fabrizio Zilibotti, 2010. "Do international labor standards contribute to the persistence of the child labor problem?," IEW - Working Papers 467, Institute for Empirical Research in Economics - University of Zurich.
  2. 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.
  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.
  4. 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.
  5. Leonardo Becchetti & Stefano Castriota & Melania Michetti, 2013. "The effect of fair trade affiliation on child schooling: evidence from a sample of Chilean honey producers," Applied Economics, Taylor & Francis Journals, vol. 45(25), pages 3552-3563, September.

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