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Moving Up or Moving Out? Anti-Sweatshop Activists and Labor Market Outcomes

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  • Ann Harrison
  • Jason Scorse

Abstract

During the 1990s, human rights and anti-sweatshop activists increased their efforts to improve working conditions and raise wages for workers in developing countries. These campaigns took many different forms: direct pressure to change legislation in developing countries, pressure on firms, newspaper campaigns, and grassroots organizing. This paper analyzes the impact of two different types of interventions on labor market outcomes in Indonesian manufacturing: (1) direct US government pressure, which contributed to a doubling of the minimum wage and (2) anti-sweatshop campaigns. The combined effects of the minimum wage legislation and the anti-sweatshop campaigns led to a 50 percent increase in real wages and a 100 percent increase in nominal wages for unskilled workers at targeted plants. We then examine whether higher wages led firms to cut employment or relocate elsewhere. Although the higher minimum wage reduced employment for unskilled workers, anti-sweatshop activism targeted at textiles, apparel, and footwear plants did not. Plants targeted by activists were more likely to close, but those losses were offset by employment gains at surviving plants. The message is a mixed one: activism significantly improved wages for unskilled workers in sweatshop industries, but probably encouraged some plants to leave Indonesia.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10492.

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Date of creation: May 2004
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Handle: RePEc:nbr:nberwo:10492

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  1. Eskeland, Gunnar S. & Harrison, Ann E., 2003. "Moving to greener pastures? Multinationals and the pollution haven hypothesis," Journal of Development Economics, Elsevier, vol. 70(1), pages 1-23, February.
  2. Eric Edmonds & Nina Pavcnik, 2002. "Does Globalization Increase Child Labor? Evidence from Vietnam," NBER Working Papers 8760, National Bureau of Economic Research, Inc.
  3. Martφn Rama, 2001. "The Consequences of doubling the minimum wage: The case of Indonesia," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 54(4), pages 864-881, July.
  4. David Card & Alan Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," Working Papers 694, Princeton University, Department of Economics, Industrial Relations Section..
  5. Currie, Janet & Harrison, Ann E, 1997. "Sharing the Costs: The Impact of Trade Reform on Capital and Labor in Morocco," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 15(3), pages S44-71, July.
  6. Aitken, Brian & Harrison, Ann & Lipsey, Robert E., 1996. "Wages and foreign ownership A comparative study of Mexico, Venezuela, and the United States," Journal of International Economics, Elsevier, vol. 40(3-4), pages 345-371, May.
  7. Orley Ashenfelter & Robert Smith, 1977. "Compliance with the Minimum Wage Law," Working Papers 478, Princeton University, Department of Economics, Industrial Relations Section..
  8. Maskus, Keith E., 1997. "Should core labor standards be imposed through international trade policy?," Policy Research Working Paper Series 1817, The World Bank.
  9. Strobl, Eric & Walsh, Frank, 2003. "Minimum Wages and Compliance: The Case of Trinidad and Tobago," Economic Development and Cultural Change, University of Chicago Press, vol. 51(2), pages 427-50, January.
  10. Alatas, Vivi & Cameron, Lisa, 2003. "The impact of minimum wages on employment in a low income country : an evaluation using the difference-differences approach," Policy Research Working Paper Series 2985, The World Bank.
  11. Andrew B. Bernard & Fredrik Sjoholm, 2003. "Foreign Owners and Plant Survival," NBER Working Papers 10039, National Bureau of Economic Research, Inc.
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Cited by:
  1. Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "Distributional Effects of Globalization in Developing Countries," NBER Working Papers 12885, National Bureau of Economic Research, Inc.
  2. Clemens, Michael & Montenegro, Claudio & Pritchett, Lant, 2009. "The Place Premium: Wage Differences for Identical Workers across the US Border," Working Paper Series rwp09-004, Harvard University, John F. Kennedy School of Government.
  3. Nguyen, Cuong, 2009. "Do Minimum Wage Increases Matter to Profitability of Private Firm? The Case of Vietnam," MPRA Paper 48655, University Library of Munich, Germany.
  4. Richard B. Freeman, 2013. "One Ring to Rule Them All? Globalization of Knowledge and Knowledge Creation," NBER Working Papers 19301, National Bureau of Economic Research, Inc.
  5. Kyvik Nord°as, Hildegunn, 2005. "Labour implications of the textiles and clothing quota phase-out," ILO Working Papers 374452, International Labour Organization.
  6. S. Sethi & Emre Veral & H. Shapiro & Olga Emelianova, 2011. "Mattel, Inc.: Global Manufacturing Principles (GMP) – A Life-Cycle Analysis of a Company-Based Code of Conduct in the Toy Industry," Journal of Business Ethics, Springer, vol. 99(4), pages 483-517, April.
  7. Kelly Bird & Chris Manning, 2005. "Minimum Wages and Poverty in a Developing Country: Simulations from Indonesia's Household Survey," Departmental Working Papers, The Australian National University, Arndt-Corden Department of Economics 2005-09, The Australian National University, Arndt-Corden Department of Economics.
  8. Hayter, Susan, 2005. "The social dimension of global production systems : a review of the issues," ILO Working Papers 374997, International Labour Organization.
  9. Nguyen Viet, Cuong, 2010. "The Impact of a Minimum Wage Increase on Employment, Wages and Expenditures of Low-Wage Workers in Vietnam," MPRA Paper 36751, University Library of Munich, Germany, revised 15 Aug 2011.
  10. Pinelopi K. Goldberg & Nina Pavcnik, 2004. "Trade, Inequality, and Poverty: What Do We Know? Evidence from Recent Trade Liberalization Episodes in Developing Countries," NBER Working Papers 10593, National Bureau of Economic Research, Inc.
  11. Drusilla K. Brown & Thomas Downes & Karen Eggleston & Ratna Kumari, 2006. "Human Resource Management Technology Diffusion Through Global Supply Chains: Productivity and Workplace Based Health Care," Discussion Papers Series, Department of Economics, Tufts University 0616, Department of Economics, Tufts University.
  12. Hyejin Ku, 2014. "Fair Trade in the Fields of Florida: The Impact of the Penny-Per-Pound on Tomato Pickers," CReAM Discussion Paper Series 1416, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  13. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," Working Papers 060708, University of California-Irvine, Department of Economics, revised Jan 2007.

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