Organic and geographical indication certifications' contributions to employment and education

Abstract

In this paper, we test to what extent Food Quality Schemes (FQS, including Geographical Indications and organic products) contribute to the social and economic sustainability of farmers and regions through employment and education. Through employment, FQS may counter the urban migration trend affecting rural regions, and help retain economic and social capital in the local region. Indeed, as FQS are often small and specialised sectors, the economic inefficiency of such businesses may translated into greater employment and social sustainability. Separately, by requiring a higher-level of quality and hence skills, FQS may encourage greater local educational attainment or skilled immigration. To test these propositions, we analyse the employment and educational outcomes of 25 FQS. Our results show that the FQS products examined have a 13% higher labour usage (labour-To-production ratio) compared to reference products, indicating that they provide greater employment. Additionally, wage levels are 32% higher in FQS compared to references. Despite providing greater employment and higher wages, profitability of FQS (i.e. how much turnover/profit is generated per employee) is nevertheless 32% higher for FQS compared to reference products, due to the ability to attract higher product prices. Finally, there is no clear link between FQS and greater (or lower) education attainment in the supply chain. Overall, our results suggest that FQS can provide a strong contribution to local employment, employee income and business profits, strengthening the social and economic sustainability of producers and regions.