FTIS 2008 (Congreso internacional sobre el Comercio Justo)

Human capital, externalities and tourism: three unexplored sides of the impact of FT affiliation

BECCHETTI L., Univ. of Rome Tor Vergata, Italy, COSTANTINO M., Crogiuolo-Mestizaje-Melting Pot Association, Trento, Italy et PORTALE E., Econometica and Univ. of Milano Bicocca, Italy

Abstract

We evaluate the impact of fair trade (FT) affiliation on a sample of (treatment and control) producers from two different fair trade projects. We find evidence of two types of externalities (FT affiliates have higher bargaining power with local intermediaries and, in one project, FT improves conditions of local non FT affiliates). The FT price premium (difference between FT and traditional importers price) is substantial even though “responsible travelers” pay more than FT importers.
In both projects, producers’ income and professional self esteem are significantly and positively correlated with affiliation years after controlling for the selection bias. Backast panel data show that better off producers are more effective in translating the price premium into a higher schooling investment for their children.