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Sweatshop Equilibrium

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Author Info
Chau, Nancy () (Cornell University)

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Abstract

This paper presents a capability-augmented model of on the job search, in which sweatshop conditions stifle the capability of the working poor to search for a job while on the job. The augmented setting unveils a sweatshop equilibrium in an otherwise archetypal Burdett-Mortensen economy, and reconciles a number of oft noted yet perplexing features of sweatshop economies. We demonstrate existence of multiple rational expectation equilibria, graduation pathways out of sweatshops in complete absence of enforcement, and country-specific efficiency and distributional responses to competitive forces and social safety nets depending precisely on whether graduation criteria are met.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4363.

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Length: 43 pages
Date of creation: Aug 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4363

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Related research
Keywords: sweatshop equilibrium; on the job search; capability deficits;

Find related papers by JEL classification:
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Banerjee, Biswajit & Bucci, Gabriella A, 1995. "On-the-Job Search in a Developing Country: An Analysis Based on Indian Data on Migrants," Economic Development and Cultural Change, University of Chicago Press, vol. 43(3), pages 565-83, April.
  2. Brown, D.K. & deardroff, A.V. & Stern, R.M., 1997. "Issues of Environmental and Labor Standards in the Global Trading System," Papers 97-10, Michigan - Center for Research on Economic & Social Theory.
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  3. Richard Rogerson & Robert Shimer & Randall Wright, 2005. "Search-Theoretic Models of the Labor Market: A Survey," Journal of Economic Literature, American Economic Association, vol. 43(4), pages 959-988, December. [Downloadable!] (restricted)
    Other versions:
  4. Benjamin Powell & David Skarbek, 2006. "Sweatshops and Third World Living Standards: Are the Jobs Worth the Sweat?," Journal of Labor Research, Transaction Publishers, vol. 27(2), pages 263-274, April. [Downloadable!] (restricted)
  5. Carol Ann Rogers & Kenneth A. Swinnerton, 2008. "A theory of exploitative child labor," Oxford Economic Papers, Oxford University Press, vol. 60(1), pages 20-41, January. [Downloadable!] (restricted)
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  6. Drusilla K. Brown, 2000. "International Trade and Core Labour Standards: A Survey of the Recent Literature," OECD Labour Market and Social Policy Occasional Papers 43, OECD, Directorate for Employment, Labour and Social Affairs. [Downloadable!]
    Other versions:
  7. Arnab K. Basu & Nancy H. Chau, 2004. "Exploitation of Child Labor and the Dynamics of Debt Bondage," Journal of Economic Growth, Springer, vol. 9(2), pages 209-238, 06. [Downloadable!]
  8. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-73, May.
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This page was last updated on 2009-11-30.

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