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Are Fair Trade Labels Effective Against Child Labour?

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Author Info
Baland, Jean-Marie
Duprez, Cédric

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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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Related research
Keywords: child labour; fair trade; label;

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Find related papers by JEL classification:
F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. George Psacharopoulos, 1997. "Child labor versus educational attainment Some evidence from Latin America," Journal of Population Economics, Springer, vol. 10(4), pages 377-386. [Downloadable!] (restricted)
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    Other versions:
  3. Edmonds, Eric V. & Pavcnik, Nina, 2005. "The effect of trade liberalization on child labor," Journal of International Economics, Elsevier, vol. 65(2), pages 401-419, March. [Downloadable!] (restricted)
  4. Basu, Kaushik & Van, Pham Hoang, 1998. "The Economics of Child Labor," American Economic Review, American Economic Association, vol. 88(3), pages 412-27, June.
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  6. Canagarajah, Sudharshan & Coulombe, Harold, 1997. "Child labor and schooling in Ghana," Policy Research Working Paper Series 1844, The World Bank. [Downloadable!]
  7. Eric V. Edmonds, 2007. "Child Labor," IZA Discussion Papers 2606, Institute for the Study of Labor (IZA). [Downloadable!]
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  8. Davies, Ronald B., 2005. "Abstinence from child labor and profit seeking," Journal of Development Economics, Elsevier, vol. 76(1), pages 251-263, February. [Downloadable!] (restricted)
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  9. 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. [Downloadable!]
  10. Partha Deb & Furio Rosati, 2002. "Determinants of Child Labor and School Attendance: The Role of Household Unobservables," Hunter College Department of Economics Working Papers 02/9, Hunter College: Department of Economics. [Downloadable!]
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  11. Eric V. Edmonds, 2005. "Does Child Labor Decline with Improving Economic Status?," Journal of Human Resources, University of Wisconsin Press, vol. 40(1). [Downloadable!] (restricted)
  12. Basu, Kaushik, 2003. "Policy Dilemmas for Controlling Child Labor," Working Papers 03-11, Cornell University, Center for Analytic Economics. [Downloadable!]
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  14. 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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  15. Sonia Bhalotra & Christopher Heady, 2003. "Child Farm Labor: The Wealth Paradox," Bristol Economics Discussion Papers 03/553, Department of Economics, University of Bristol, UK. [Downloadable!]
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  16. Ranjan Ray, 2000. "Analysis of child labour in Peru and Pakistan: A comparative study," Journal of Population Economics, Springer, vol. 13(1), pages 3-19. [Downloadable!] (restricted)
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  17. Jean-Marie Baland & James A. Robinson, 2000. "Is Child Labor Inefficient?," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 663-679, August. [Downloadable!] (restricted)
  18. 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, Blackwell Publishing, vol. 10(3), pages 466-491, 08. [Downloadable!] (restricted)
  19. Dessy, Sylvain E., 2000. "A defense of compulsive measures against child labor," Journal of Development Economics, Elsevier, vol. 62(1), pages 261-275, June. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  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:
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