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Could international labour rights play a role in US trade?

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  • Christian E. Weller

Abstract

During its last complete business cycle, from 2001 to 2007, the USA experienced unsustainably high trade deficits. Policymakers are considering a number of measures to avoid a recurrence of such large external imbalances. One such measure is the promotion of better labour rights around the world. Proponents argue that higher labour standards would boost US exports by increasing income growth abroad and reduce US imports by shrinking international price differences. Opponents of such a policy move argue that it is disguised protectionism that will impede trade and harm living standards in the USA and abroad. In this paper, I combine US trade data with data on international labour standards and other relevant economic variables to study any links between labour rights abroad and US trade. The results suggest that the USA would have benefited from more exports if there had been better worker rights around the world, but that labour rights would not have had any measurable impact on US imports. That is, the promotion of better worker rights around the world could contribute to smaller external imbalances without impeding international trade flows. Copyright The Author 2010. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.

Suggested Citation

  • Christian E. Weller, 2011. "Could international labour rights play a role in US trade?," Cambridge Journal of Economics, Oxford University Press, vol. 35(1), pages 39-57.
  • Handle: RePEc:oup:cambje:v:35:y:2011:i:1:p:39-57
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    File URL: http://hdl.handle.net/10.1093/cje/beq011
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    References listed on IDEAS

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    1. Busse, Matthias, 2002. "Do Labor Standards Affect Comparative Advantage in Developing Countries?," World Development, Elsevier, vol. 30(11), pages 1921-1932, November.
    2. Dutt, Pushan & Mitra, Devashish, 2006. "Labor versus capital in trade-policy: The role of ideology and inequality," Journal of International Economics, Elsevier, vol. 69(2), pages 310-320, July.
    3. Christian Weller & Laura Singleton, 2004. "Political Freedom, External Liberalization and Financial Stability," International Review of Applied Economics, Taylor & Francis Journals, vol. 18(1), pages 1-22.
    4. Dani Rodrik, 1999. "Democracies Pay Higher Wages," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 707-738.
    5. Vivek H. Dehejia & Yiagadeesen Samy, 2007. "Trade and Labor Standards: A Review of the Theory and New Empirical Evidence," Carleton Economic Papers 07-12, Carleton University, Department of Economics.
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    7. John WEEKS, 1999. "Wages, employment and workers' rights in Latin America, 1970–98," International Labour Review, International Labour Organization, vol. 138(2), pages 151-169, June.
    8. Catherine L. Mann, 2002. "Perspectives on the U.S. Current Account Deficit and Sustainability," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 131-152, Summer.
    9. Thomas I. Palley, 2004. "The economic case for international labour standards," Cambridge Journal of Economics, Oxford University Press, vol. 28(1), pages 21-36, January.
    10. Martin, Will & Maskus, Keith E, 2001. "Core Labor Standards and Competitiveness: Implications for Global Trade Policy," Review of International Economics, Wiley Blackwell, vol. 9(2), pages 317-328, May.
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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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