This article proposes an empirical investigation concerning the links between labour standards and income inequalities. In a first time, we build an index of core labour standards (child labour, forced labour, discrimination, freedom of association and ILO conventions). No links is found a priori with inequalities. This can be explained by the difference between ILO ratifications and effective enforcement of these standards. That is why, in a second time, we take into consideration the endogeneity of these norms thanks to instrumental variables. A new index of effective labour standards is obtained as an output of the political and juridical system. There is a high probability that countries with better institutions are more able to effectively put in place labour standards. We then find a Kuznet curb between standards and income inequalities for 90 countries between 1990 and 2001. Labour standards can be seem as an intermediate explicative factor to explain Kuznet curb.
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Find related papers by JEL classification: J80 - Labor and Demographic Economics - - Labor Standards - - - General O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
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Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998.
"Law and Finance,"
Journal of Political Economy,
University of Chicago Press, vol. 106(6), pages 1113-1155, December.
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Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1996.
"Law and Finance,"
NBER Working Papers
5661, National Bureau of Economic Research, Inc.
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