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Fair Trade in the Fields of Florida: The Impact of the Penny-Per-Pound on Tomato Pickers

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Listed:
  • Hyejin Ku

    (University College 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.

Suggested Citation

  • Hyejin Ku, 2014. "Fair Trade in the Fields of Florida: The Impact of the Penny-Per-Pound on Tomato Pickers," RF Berlin - CReAM Discussion Paper Series 1416, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    • Handle: RePEc:crm:wpaper:1416
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    consumer activism; price premium; capacity constraint; natural experiment;
    All these keywords.

    JEL classification:

    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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