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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.

Suggested Citation

  • 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, August.
  • Handle: RePEc:bla:rdevec:v:10:y:2006:i:3:p:466-491
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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?," Journal of Economic Growth, Springer, vol. 15(1), pages 1-31, March.
    2. Diether W. Beuermann, 2015. "Information and Communications Technology, Agricultural Profitability and Child Labor in Rural Peru," Review of Development Economics, Wiley Blackwell, vol. 19(4), pages 988-1005, November.
    3. Edmonds, Eric V., 2008. "Child Labor," Handbook of Development Economics, Elsevier.
    4. Margaryta Klymak, 2017. "The Trade Impacts of the Naming and Shaming of Forced and Child Labor," Trinity Economics Papers tep1517, Trinity College Dublin, Department of Economics.
    5. Auriol, Emmanuelle & Schilizzi, Steven G.M., 2015. "Quality signaling through certification in developing countries," Journal of Development Economics, Elsevier, vol. 116(C), pages 105-121.
    6. Subhayu Bandyopadhyay & Sudeshna C. Bandyopadhyay, 2009. "Trade and Child Labor: A General Equilibrium Analysis," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 45(1), pages 5-18, January.
    7. Baland, Jean-Marie & Duprez, Cédric, 2007. "Are Fair Trade Labels Effective Against Child Labour?," CEPR Discussion Papers 6259, C.E.P.R. Discussion Papers.
    8. Michele Di Maio & Giorgio Fabbri, 2013. "Consumer boycott, household heterogeneity, and child labor," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(4), pages 1609-1630, 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, 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.
    11. 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).
    12. 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.
    13. Alexander W. Cappelen & Tone Ognedal, 2017. "Certification and socially responsible production," Economics of Governance, Springer, vol. 18(1), pages 71-84, February.
    14. Subhayu Bandyopadhyay & Sudeshna C. Bandyopadhyay, 2009. "Trade and Child Labor: A General Equilibrium Analysis," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 45(1), pages 5-18, January.
    15. 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.
    16. 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.

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