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Transgovernmental Labour Standards Enforcement in a Pan‐European Labour Market: An Arms Race Between Institutional Alignment and Regulatory Arbitrage

Author

Listed:
  • Nathan Lillie
  • Anita Brzozowska
  • Kairit Kall
  • Justyna Salamońska
  • Kamil Matuszczyk

Abstract

Transgovernmental co‐operation is an important European Union (EU) regulatory method, but it imposes transaction costs on the organizations involved. Regulatory requirements under conditions of European free movement drive transgovernmentalism, but transaction costs also shape transgovernmental regulation and regulatory outcomes. We investigate co‐operation around labour standards regulation for posted construction workers, focusing on bilateral co‐operation of labour inspectorates between Estonia and Finland and comparing it with co‐operation efforts between Poland and Finland, and Ukraine via Poland to Finland. The shifting patterns of labour mobility and employer efforts to recruit from less regulated sources mean that investment in bilateral relations can be undermined by the dynamic character of the pan‐European labour market. This article contributes to debates on EU regulatory governance by showing how transaction costs from co‐operation can decrease the effectiveness of transgovernmental network‐based governance; in the case of labour regulation, employers exploit this to undermine the effectiveness of labour inspection co‐operation.

Suggested Citation

  • Nathan Lillie & Anita Brzozowska & Kairit Kall & Justyna Salamońska & Kamil Matuszczyk, 2025. "Transgovernmental Labour Standards Enforcement in a Pan‐European Labour Market: An Arms Race Between Institutional Alignment and Regulatory Arbitrage," Journal of Common Market Studies, Wiley Blackwell, vol. 63(3), pages 804-820, May.
    • Handle: RePEc:bla:jcmkts:v:63:y:2025:i:3:p:804-820
    DOI: 10.1111/jcms.13650
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    References listed on IDEAS

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    1. Heikki Marjosola, 2021. "The problem of regulatory arbitrage: A transaction cost economics perspective," Regulation & Governance, John Wiley & Sons, vol. 15(2), pages 388-407, April.
    2. Spiller, Pablo T., 2013. "Transaction cost regulation," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 232-242.
    3. Kairit Kall & Nathan Lillie & Markku Sippola & Laura Mankki, 2019. "Overcoming Barriers to Transnational Organizing Through Identity Work: Finnish–Estonian Trade Union Cooperation," Work, Employment & Society, British Sociological Association, vol. 33(2), pages 208-225, April.
    4. Martinsen, Dorte Sindbjerg & Schrama, Reini & Mastenbroek, Ellen, 2021. "Who Interacts with Whom? Drivers of Networked Welfare Governance in Europe," British Journal of Political Science, Cambridge University Press, vol. 51(4), pages 1636-1653, October.
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    Cited by:

    1. Nathan Lillie & Lisa Berntsen & Olena Fedyuk & Tibor T Meszmann, 2025. "Migrant labour regimes and the Regulation of Temporary Labour Migration in Europe: an Introduction," Discussion Papers 78, Central European Labour Studies Institute (CELSI).

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