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How Bad is Globalization for Labour Standards in the North?

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  • Alejandro DONADO

    () (University of Wurzburg, Department of Economics)

  • Klaus WALDE

    () (University of Mainz, School of Management and Economics, Universite catholique de Louvain and CESifo)

Abstract

We analyse a world consisting of "the North" and "the South" where labour standards in the North are set by trade unions. Standards set by unions tend to increase output and welfare. There are no unions in the South and work standards are suboptimal. Trade between these two countries can imply a reduction in work standards in the North. Moreover, when trade unions are established in the South, the North, including northern unions, tend to lose. Quantitatively, these effects are small and overcompensated by gains in the South. The existing empirical literature tends to support our findings.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2010028.

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Length: 27
Date of creation: 30 Aug 2010
Date of revision:
Handle: RePEc:ctl:louvir:2010028

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Keywords: occupational health and safety; trade unions; international trade; welfare;

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  1. Eric Edmonds, 2007. "Child Labor," Working Papers id:988, eSocialSciences.
  2. Booth, Alison L & Chatterji, Monojit, 1998. "Unions and Efficient Training," Economic Journal, Royal Economic Society, vol. 108(447), pages 328-43, March.
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  9. Naylor, Robin, 1999. "Union Wage Strategies and International Trade," Economic Journal, Royal Economic Society, vol. 109(452), pages 102-25, January.
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  12. Donado, Alejandro & Wälde, Klaus, 2009. "Trade unions go global!," IAB Discussion Paper 200903, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  13. Mihir A. Desai & C. Fritz Foley & James R. Hines Jr., 2005. "Foreign Direct Investment and the Domestic Capital Stock," American Economic Review, American Economic Association, vol. 95(2), pages 33-38, May.
  14. Kimberly Ann Elliott & Richard B. Freeman, 2003. "Can Labor Standards Improve under Globalization?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 338, 1st quart.
  15. Eckel, Carsten & Egger, Hartmut, 2009. "Wage bargaining and multinational firms," Journal of International Economics, Elsevier, vol. 77(2), pages 206-214, April.
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