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Are Fair Trade Labels Effective Against Child Labour?

  • Baland, Jean-Marie
  • Duprez, Cédric

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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  1. Basu, Kaushik, 2003. "Policy Dilemmas for Controlling Child Labor," Working Papers 03-11, Cornell University, Center for Analytic Economics.
  2. Partha Deb & Furio Rosati, 2002. "Determinants of Child Labor and School Attendance: The Role of Household Unobservables," Economics Working Paper Archive at Hunter College 02/9, Hunter College Department of Economics.
  3. Ronald B. Davies, 2000. "Abstinence from Child Labor and Profit Seeking," University of Oregon Economics Department Working Papers 2000-1, University of Oregon Economics Department, revised 01 Aug 2002.
  4. Sonia Bhalotra, and Zafiris Tzannatos, 2003. "Child labor : what have we learnt?," Social Protection Discussion Papers 27872, The World Bank.
  5. Sonia Bhalotra & Christopher Heady, 2003. "Child Farm Labor: The Wealth Paradox," Bristol Economics Discussion Papers 03/553, Department of Economics, University of Bristol, UK.
  6. Ranjan, Priya, 2001. "Credit constraints and the phenomenon of child labor," Journal of Development Economics, Elsevier, vol. 64(1), pages 81-102, February.
  7. Canagarajah, Sudharshan & Coulombe, Harold, 1997. "Child labor and schooling in Ghana," Policy Research Working Paper Series 1844, The World Bank.
  8. 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.
  9. Basu, Kaushik & Tzannatos, Zafiris, 2003. "The Global Child Labor Problem: What Do We Know and What Can We Do?," Working Papers 03-06, Cornell University, Center for Analytic Economics.
  10. Basu, Kaushik & Van, Pham Hoang, 1998. "The Economics of Child Labor," American Economic Review, American Economic Association, vol. 88(3), pages 412-27, June.
  11. Dessy, Sylvain E., 2000. "A defense of compulsive measures against child labor," Journal of Development Economics, Elsevier, vol. 62(1), pages 261-275, June.
  12. 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, 08.
  13. Eric V. Edmonds, 2005. "Does Child Labor Decline with Improving Economic Status?," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
  14. Drusilla K. Brown & Alan V. Deardorff & Robert M Stern, 2001. "Child Labor: Theory, Evidence, and Policy," Working Papers 474, Research Seminar in International Economics, University of Michigan.
  15. Edmonds, Eric V., 2008. "Child Labor," Handbook of Development Economics, Elsevier.
  16. George Psacharopoulos, 1997. "Child labor versus educational attainment Some evidence from Latin America," Journal of Population Economics, Springer, vol. 10(4), pages 377-386.
  17. 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.
  18. Canagarajah, Sudharshan & Nielsen, Helena Skyt, 1999. "Child labor and schooling in Africa : a comparative study," Social Protection Discussion Papers 20456, The World Bank.
  19. 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.
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