Is There Consumer Demand for Fair Labor Standards? Evidence from a Field Experiment
41 Pages Posted: 25 Apr 2011
Date Written: April 22, 2011
A majority of consumers say they would be willing to pay extra for products made in workplaces with fair labor standards. But as yet there is no clear evidence that consumers would actually behave in this fashion and pay a substantial premium for ethically labeled goods. We provide new evidence on consumer behavior from a field experiment conducted in a major retail store in New York City. We find that a label providing information about fair labor standards in workplaces had a substantial positive effect on sales of labeled items. Sales of labeled brands rose by around 10% when the labels were applied; sales rose between 16-33% when the label was combined with price markups of 10-20%. The market shares of the brands rose by 20-41% when they were labeled and offered at a price premium.
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