ONLINE - Responsible Sourcing? Theory and Evidence from Costa Rica

12.05.2021 14:15 – 15:30

INSTITUTE OF ECONOMICS AND ECONOMETRICS SEMINAR /

joint with Alonso Alfaro-Urena, Ben Faber, Isabela Manelici and Jose Pablo Vasquez

ABSTRACT :

In recent years the adoption of Responsible Sourcing (RS) requirements by multinational enterprises (MNEs) has become widespread. They impose minimum standards on wages, benefits, working conditions and other production practices at their suppliers. In this paper, we study the impact of RS on a developing country. To guide the analysis, we develop a quantitative general equilibrium model designed to analyze the incidence of RS requirements on suppliers and workers in sourcing origin countries. We derive comparative statics and welfare expressions under different modeling assumptions and decompose the competing forces. We then build a new database covering the near-universe of RS rollouts by more than 400 MNEs sourcing in Costa Rica starting in 2009, and combine it with firm-to-firm transaction records and employer-employee matched administrative microdata for all Costa-Rican firms. Guided by model predictions, we provide empirical evidence on the effects of RS rollouts on suppliers and workers and use them to discriminate between different variants of our theory. Finally, we combine empirical evidence and microdata to calibrate the model and quantify the welfare implications of RS and related policy counterfactuals.


Sponsored by Centre LIVES

Lieu

Online

entrée libre