Financial Access or Price Premiums? A Nuanced View into Improving Farmer Welfare and Reducing Child Labor in Commodity Supply Chains

Smallholder households growing commodities such as cocoa often depend on their children’s labor to secure basic subsistence. We model their borrowing, saving, consumption, and child-labor decisions and uncover sharp trade-offs: better credit access can reduce or increase child labor depending on why a household borrows; better savings access consistently reduces child labor but can lower consumption; and price premiums reduce child labor only when sufficiently large, otherwise they may increase it. Effective interventions must therefore be tailored to household circumstances.

Book chapter in Responsible and Sustainable Operations: The New Frontier, Springer Series in Supply Chain Management, vol. 24, pp. 145–159