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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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Bibliographic Info

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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Citations

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Cited by:
  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.
  2. 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 and Francis Journals, vol. 45(25), pages 3552-3563, September.
  3. 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.
  4. 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.
  5. 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.

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