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The Effects of Fair Trade Certification: Evidence from Coffee Producers in Costa Rica

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  • Raluca Dragusanu
  • Eduardo Montero
  • Nathan Nunn

Abstract

We study the effects of Fair Trade (FT) certification of coffee on producers and households in Costa Rica. Examining the production dynamics of all Costa Rican coffee mills from 1999 to 2014, we find that when global coffee prices are lower and the FT guaranteed minimum price is binding, FT certification is associated with a higher sales price, greater sales, and more revenues. We also find that certification reduces the probability of a mill closing down and exiting the industry. Looking at households, we find that certification is associated with higher incomes for farm owners. Part of this is due to a transfer of income from intermediaries whose incomes decrease due to FT. We find no effect of FT on unskilled workers, who are the more disadvantaged group within the coffee sector.

Suggested Citation

  • Raluca Dragusanu & Eduardo Montero & Nathan Nunn, 2022. "The Effects of Fair Trade Certification: Evidence from Coffee Producers in Costa Rica," Journal of the European Economic Association, European Economic Association, vol. 20(4), pages 1743-1790.
    • Handle: RePEc:oup:jeurec:v:20:y:2022:i:4:p:1743-1790.
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    File URL: http://hdl.handle.net/10.1093/jeea/jvac026
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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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