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Does Fair Trade Help to Avoid Poverty Traps? The Effect of Fair Trade on Producers' Income and Schooling Decisions

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  • Leonardo Becchetti
  • Pierluigi Conzo
  • Fabio Pisani
  • Elisa Portale

Abstract

We evaluate the impact of fair trade (FT) affiliation on a sample of (treatment and control) producers from two different fair trade projects in a poorer and a relatively better off area of Peru. In both projects, we find that producer's income is significantly associated with years of affiliation after controlling for spillovers/externalities. Estimates on the determinants of schooling decisions and education gap on backcast panel data are not at odds with the luxury axiom hypothesis, showing that the impact of affiliation years on the dependent variable is stronger in the project with relatively better-off producers. This result is also consistent with the relatively higher returns on (parental) education estimated in the same project.

Suggested Citation

  • Leonardo Becchetti & Pierluigi Conzo & Fabio Pisani & Elisa Portale, 2011. "Does Fair Trade Help to Avoid Poverty Traps? The Effect of Fair Trade on Producers' Income and Schooling Decisions," Rivista italiana degli economisti, Società editrice il Mulino, issue 2, pages 281-318.
  • Handle: RePEc:mul:jqat1f:doi:10.1427/34974:y:2011:i:2:p:281-318
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    Keywords

    fair trade; child labour; O19; O22; D64.;

    JEL classification:

    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis

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