Does Fair Trade Help to Avoid Poverty Traps? The Effect of Fair Trade on Producers' Income and Schooling Decisions
Posted: 24 Sep 2011 Last revised: 31 Aug 2014
Date Written: July 1, 2011
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.
Keywords: fair trade, child labour
JEL Classification: O19, O22, D64
Suggested Citation: Suggested Citation