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How bad is globalization for labour standards in the north?

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  • Donado, Alejandro
  • Wälde, Klaus

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 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 University of Würzburg, Chair for Monetary Policy and International Economics in its series W.E.P. - Würzburg Economic Papers with number 84.

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Date of creation: 2010
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Handle: RePEc:zbw:wuewep:84

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

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  1. Chau, Nancy H & Kanbur, Ravi, 2001. "The Race To the Bottom, From the Bottom," CEPR Discussion Papers 2687, C.E.P.R. Discussion Papers.
  2. Boeri, Tito & Burda, Michael C., 2008. "Preferences for Collective versus Individualised Wage Setting," IZA Discussion Papers 3365, Institute for the Study of Labor (IZA).
  3. Eric Neumayer & Indra de Soysa, 2003. "Trade Openness, Foreign Direct Investment and Child Labor," International Trade 0312001, EconWPA, revised 16 Mar 2004.
  4. 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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  7. 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 Publishing.
  8. Aloi, Marta & Leite-Monteiro, Manuel & Lloyd-Braga, Teresa, 2009. "Unionized labor markets and globalized capital markets," Journal of International Economics, Elsevier, vol. 78(1), pages 149-153, June.
  9. Naylor, Robin, 1997. "Union Wage Strategies and International Trade," The Warwick Economics Research Paper Series (TWERPS) 480, University of Warwick, Department of Economics.
  10. 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].
  11. Eckel, Carsten & Egger, Hartmut, 2009. "Wage bargaining and multinational firms," Journal of International Economics, Elsevier, vol. 77(2), pages 206-214, April.
  12. Ronald B. Davies & Annie Voy, 2006. "The Effect of FDI on Child Labor," University of Oregon Economics Department Working Papers 2007-4, University of Oregon Economics Department, revised 01 Feb 2007.
  13. Levine, David I. & Rothman, Dov, 2006. "Does trade affect child health?," Journal of Health Economics, Elsevier, vol. 25(3), pages 538-554, May.
  14. Mezzetti, C. & Dinopoulos, E., 1989. "Domestic Unionization And Import Competition," Papers 337, California Davis - Institute of Governmental Affairs.
  15. 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.
  16. Booth, Alison L & Chatterji, Monojit, 1998. "Unions and Efficient Training," Economic Journal, Royal Economic Society, vol. 108(447), pages 328-43, March.
  17. 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.
  18. Nirvikar Singh, 2004. "The Impact of International Labor Standards: A Survey of Economic Theory," International Trade 0412007, EconWPA.
  19. 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.
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