Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/295482 
Authors: 
Year of Publication: 
2014
Series/Report no.: 
CReAM Discussion Paper Series No. 16/14
Publisher: 
Centre for Research & Analysis of Migration (CReAM), Department of Economics, University College London, London
Abstract: 
Despite the enduring appeal of fair trade activism, little evidence exists on its effectiveness in improving producer welfare. This paper provides evidence on the direct effects of a fair trade premium on its target beneficiaries, using the case of the Penny-Per-Pound, a program that increased the piece-rate wages received by tomato pickers in Florida. It highlights that in output-constraint settings, common in agriculture, a piece-rate compensation scheme can result in externalities among workers. By inadvertently incentivizing the workers to increase their effort whereas the total output is fixed, the program amplified the externality and generated unforeseen risks for worker displacement.
Subjects: 
consumer activism
price premium
capacity constraint
natural experiment
JEL: 
J88
M52
O13
Document Type: 
Working Paper

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