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How Bad is Globalization for Labour Standards in the North?

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  • Alejandro Donado
  • Klaus Wälde

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, tends to lose out. Quantitatively, these effects are small and overcompensated for by gains in the South. The existing empirical literature tends to support our findings.

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Bibliographic Info

Paper provided by FIW in its series FIW Working Paper series with number 059.

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Length: 43
Date of creation: Nov 2010
Date of revision:
Handle: RePEc:wsr:wpaper:y:2010:i:059

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

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  1. Davies, Ronald B. & Voy, Annie, 2009. "The effect of FDI on child labor," Journal of Development Economics, Elsevier, vol. 88(1), pages 59-66, January.
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  5. Boulhol, Herv, 2009. "Do capital market and trade liberalization trigger labor market deregulation?," Journal of International Economics, Elsevier, vol. 77(2), pages 223-233, April.
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  9. Brown, D.K. & Dearorff, A.V. & Stern, R.M., 1993. "International Labor Standards and Trade: A Theoretical Analysis," Working Papers 333, Research Seminar in International Economics, University of Michigan.
  10. Boeri, Tito & Burda, Michael C., 2008. "Preferences for Collective versus Individualised Wage Setting," IZA Discussion Papers 3365, Institute for the Study of Labor (IZA).
  11. Eric Neumayer & Indra de Soysa, 2003. "Trade Openness, Foreign Direct Investment and Child Labor," International Trade 0312001, EconWPA, revised 16 Mar 2004.
  12. Levine, David I. & Rothman, Dov, 2006. "Does trade affect child health?," Journal of Health Economics, Elsevier, vol. 25(3), pages 538-554, May.
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  16. 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.
  17. repec:ese:iserwp:96-13 is not listed on IDEAS
  18. Marcella Alsan & David E. Bloom & David Canning, 2004. "The Effect of Population Health on Foreign Direct Investment," NBER Working Papers 10596, National Bureau of Economic Research, Inc.
  19. Alejandro Donado & Klaus Wälde, 2008. "Trade Unions Go Global!," CESifo Working Paper Series 2368, CESifo Group Munich.
  20. 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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