Combating Child Labor: Incentives and Information Disclosure in Global Supply Chains

Speaker: Dr. Xin Fang(Singapore Management University)


Topic:	Combating Child Labor: Incentives and Information Disclosure in Global Supply Chains
Time & Date:	10:30am-12:00pm, 2018/1/12
Venue:	Room A619, Teaching A
Speaker:	Dr. Xin Fang(Singapore Management University)
Detail:	We investigate multinational firms’ strategies to control their suppliers’ use of child labor in global supply chains. We also examine the effect of several initiatives taken by NGOs and information disclosure on child labor. Nearly 200 million children are engaged in child labor, many in developing countries that are part of the supply base of global manufacturing networks. However, there has been little research on evaluating the impact of firms’ strategies and NGOs’ initiatives on child labor. We develop a game-theoretic model based on a two-tier supply chain, in which a multinational manufacturer in a developed country sells the product made by a supplier in a developing country. The manufacturer’s pricing and inspection strategies work as strategic substitutes in combating child labor, so reducing the cost of inspections alone does not necessarily help reduce child labor. When information about the manufacturer’s inspection policy is disclosed, inspections can become more effective, but it may inadvertently induce more child labor unless the manufacturer adopts a zero-tolerance policy against child labor. This problem persists even when the manufacturer uses a deferred payment that is contingent on no child labor being found during inspections.