Guaranteed Manufactured without Child Labor: The Economics of Consumer Boycotts, Social Labeling and Trade Sanctions

Arnab Basu (), Nancy H. Chau () and Ulrike Grote

Review of Development Economics, 2006, vol. 10, issue 3, pages 466-491

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.

Date: 2006
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