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Coerced Labor in the Cotton Sector: How Global Commodity Prices (Don't) Transmit to the Poor

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  • Danzer, Alexander M.

    (Catholic University of Eichstätt-Ingolstadt)

  • Grundke, Robert

    (OECD)

Abstract

This paper investigates the economic fortunes of coerced vs. free workers in a global supply chain. To identify the differential treatment of otherwise similar workers we resort to a unique exogenous labor demand shock that affects wages in voluntary and involuntary labor relations differently. We identify the wage pass-through by capitalizing on Tajikistan's geographic variation in the suitability for cotton production combined with a surge in the world market price of cotton in 2010/11 in two types of firms: randomly privatized small farms and not yet privatized parastatal farms, the latter of which command political capital to coerce workers. The expansion in land attributed to cotton production led to increases in labor demand and wages for cotton pickers; however, the price hike benefits only workers on entrepreneurial private farms, whereas coerced workers of parastatal enterprises miss out. The results provide evidence for the political economy of labor coercion and for the dependence of the economic lives of many poor on the competitive structure of local labor markets.

Suggested Citation

  • Danzer, Alexander M. & Grundke, Robert, 2016. "Coerced Labor in the Cotton Sector: How Global Commodity Prices (Don't) Transmit to the Poor," IZA Discussion Papers 9971, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9971
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    More about this item

    Keywords

    coerced labor; export price; price pass-through; cotton; wage; local labor market; Tajikistan;
    All these keywords.

    JEL classification:

    • J47 - Labor and Demographic Economics - - Particular Labor Markets - - - Coercive Labor Markets
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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