Stefano Castriota

The Economics of Collective Reputation: Evidence from the Wine Industry

We use original data regarding the array of Italian winery coalitions (wine denominations) to analyze the economics and determinants of collective reputation. We first run a cross‐sectional analysis with 2008 data and the full set of control variables, then move to the dynamics of collective reputation with panel data analysis on a 30‐year time span (1978–2008). Group reputation is history‐dependent. In particular, past bad collective behavior increases the probability of being stuck in a “bad reputation trap.” Minimum quality standards and effective enforcement are fundamental drivers of group reputation. The relationship between group size and collective reputation is non‐linear: free entry may not be optimal due to free‐riding problems. Finally, institutional signals such as the wine classification system are useful because they can be used by consumers as easily available proxies for information that is much more difficult to acquire.

Calamity, Aid and Indirect Reciprocity: The Long Run Impact of Tsunami on Altruism

Natural disasters produce effects on social, risk and time preferences of victims. We test altruistic preferences on a sample of Sri Lankan microfinance borrowers affected/unaffected by the tsunami 2004 after 7 years from the event. People reporting at least one damage transfer and expect less in the dictator game than no-damaged. Among damaged, who suffered also house damages or injuries send and expect more than those reporting only losses to the economic activity. Since the former are shown to receive significantly more aids than the latter we interpret such superior generosity as a form of indirect reciprocity.

The effect of fair trade affiliation on child schooling: evidence from a sample of Chilean honey producers

We evaluate the impact of Fair Trade (FT) affiliation on child schooling within a sample of Chilean honey producers with a retrospective panel data approach. From a theoretical point of view, we argue that FT should have a positive effect on child schooling since it generates a short-run pure income effect together with a medium-run productivity effect on both adult and child wages. On the other hand, because of the higher productivity generated by the medium-run effect, the opportunity cost of child education increases if they work with their parents. The direction of the impact of FT affiliation on child schooling is therefore uncertain and requires empirical testing. Our econometric findings document a positive and significant impact of affiliation years on child schooling after controlling for endogeneity and heterogeneity between the treatment and control sample.

Is Fair Trade Honey Sweeter? An Empirical Analysis on the Effect of Affiliation on Productivity

We evaluate the impact of affiliation to Fair Trade on a sample of Chilean honey producers. Evidence from standard regressions and propensity score matching shows that affiliated farmers have higher productivity (income from honey per worked hour) than the control sample. Additional results on the effects of affiliation on training, cooperation and advances on payments suggest that affiliation contributed both to, and independently from, the economies of scale effect. Therefore, we show that the productivity effect is partially explained by the superior capacity of affiliated workers to exploit economies of scale.

Tasters' bias in wine guides' quality evaluations

Using a new database on Italian wines rated by the Guida dei Vini di Veronelli from 2004 to 2009, we show that the tasters’ quality evaluations are affected by two sources of personal bias, namely generosity and personal preferences towards certain types of wine characteristics.

Disaster, Aid, and Preferences: The Long-run Impact of the Tsunami on Giving in Sri Lanka

Do natural disasters produce effects on preferences of victims in the long run? We test the impact of the tsunami shock on generosity of a sample of Sri Lankan affected/unaffected microfinance borrowers seven years after the event.

Bank strategies in catastrophe settings: empirical evidence and policy suggestions

The poor in developing countries are the most exposed to natural catastrophes and microfinance organizations may potentially ease their economic recovery. Yet, no evidence on MFIs strategies after natural disasters exists. We aim to fill this gap with a database which merges bank records of loans, issued before and after the 2004 Tsunami by a Sri Lankan MFI recapitalized by Western donors, with detailed survey data on the corresponding borrowers. Evidence of effective post-calamity intervention is supported since the defaults in the post-Tsunami years (2004-2006) do not imply smaller loans in the period following the recovery (2007-2011) while Tsunami damages increase their size. Furthermore, a cross-subsidization mechanism is in place: clients with a long successful credit history (and also those not damaged by the calamity) pay higher interest rates. All these features helped damaged people to recover and repay both new and previous loans. However, we also document an abnormal and significant increase in default rates of non victims suggesting the existence of contagion and/or strategic default problems. For this reason we suggest reconversion of donor aid into financial support to compulsory microinsurance schemes for borrowers.

Social capital dynamics and collective action: the role of subjective satisfaction in a common pool resource experiment

In low income countries grass-root collective action is a well known substitute for government provision of public goods. In our research we wonder what is its effect on the law of motion of social capital, a crucial microeconomic determinant of economic development. To this purpose we structure a ?sandwich? experiment in which participants play a public good game (PGG) between two trust games (TG1 and TG2). Our findings show that the change in trustworthiness between the two trust game rounds generated by the PGG treatment is crucially affected by the subjective satisfaction about the PGG rather than by standard objective measures related to PGG players? behavior. These results highlight that subjective satisfaction after collective action has relevant predictive power on social capital creation providing information which can be crucial to design successful self-organized resource regimes.

Wage Differentials in Italian Social Enterprises

In Italy social enterprises include more than 7,000 institutions with around 250,000 workers serving more than three million people, a big share of which disadvantaged. Using the ICSI 2007 survey conducted by a pool of Italian universities on a representative sample of social enterprises, we analyze the determinants of nominal and real wages (adjusted for the cost of living in the area of residence). Our two main findings show that: i) low wages, absence of «direct» education premia and gender wage gaps may reduce attractiveness of this sector (beyond intrinsic motivations) for young talented workers even though indirect education premia in terms of higher probability of becoming manager exist; ii) cooperative wage differentials are sensitive to regional disparities in PPP even though they do not fully compensate for them: nominal wages are higher in Northern Italy but, after adjusting for the cost of living, they become higher in the South.

Child Labour and Consumer Responsibility: An Impact Study

We evaluate the impact of fair trade (FT) affiliation on child labour on a sample of Chilean honey producers with a retrospective panel data approach. From a theoretical point of view we argue that, in the short run, FT acts, on both adult and child wages, as a pure income effect to which a productivity effect adds up in the medium run. The direction of the impact is therefore uncertain and requires empirical testing. Our econometric findings document a significant impact of affiliation years on child schooling after controlling for endogeneity and the heterogeneity between treatment and control sample.