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Labor Standards and Economic Integration in the European Union: an Empirical Analysis

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Listed:
  • H. Dehejia, Vivek

    () (Carleton University & CESifo)

  • Samy, Yiagadeesen

    () (Carleton University)

Abstract

This study is motivated by frequent calls to harmonize labor standards across countries, which result from the fear that economic integration (and the accompanying liberalization of trade flows) will lead to an erosion of working conditions, as countries deliberately try to reduce labor standards in order to maintain competitiveness. We empirically examine the conventional wisdom that labour standards are important determinants of trade performance and whether there has been a “race to the bottom” of standards across EU-15 countries with deeper integration. Our panel data estimates for the period 1980-2001 provide mixed evidence regarding the conventional wisdom and “σ-convergence” in labor standards.

Suggested Citation

  • H. Dehejia, Vivek & Samy, Yiagadeesen, 2008. "Labor Standards and Economic Integration in the European Union: an Empirical Analysis," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 817-847.
  • Handle: RePEc:ris:integr:0455
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    References listed on IDEAS

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    1. Andrea Bassanini & Stefano Scarpetta, 2001. "Does Human Capital Matter for Growth in OECD Countries?: Evidence from Pooled Mean-Group Estimates," OECD Economics Department Working Papers 282, OECD Publishing.
    2. Sala-i-Martin, Xavier X., 1996. "Regional cohesion: Evidence and theories of regional growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1325-1352, June.
    3. Dehejia, Vivek H., 1998. "Can standards immiserize?," Economics Letters, Elsevier, vol. 59(3), pages 361-366, June.
    4. Cees van Beers, 1998. "Labour Standards and Trade Flows of OECD Countries," The World Economy, Wiley Blackwell, vol. 21(1), pages 57-73, January.
    5. Gabriel Rodriguez & Yiagadeesen Samy, 2003. "Analysing the effects of labour standards on US export performance. A time series approach with structural change," Applied Economics, Taylor & Francis Journals, vol. 35(9), pages 1043-1051.
    6. Richard A. Brecher, 1974. "Minimum Wage Rates and the Pure Theory of International Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 88(1), pages 98-116.
    7. Alan B. Krueger, 1999. "From Bismarck to Maastricht: The March to European Union and the Labor Compact," Working Papers 803, Princeton University, Department of Economics, Industrial Relations Section..
    8. Brecher, Richard A., 1974. "Optimal commercial policy for a minimum-wage economy," Journal of International Economics, Elsevier, vol. 4(2), pages 139-149, May.
    9. Vivek Dehejia & Yiagadeesen Samy, 2004. "Trade and labour standards: theory and new empirical evidence," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 13(2), pages 179-198.
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    Cited by:

    1. repec:ilo:ilowps:470016 is not listed on IDEAS
    2. Hecock, R. Douglas & Jepsen, Eric M., 2013. "Should Countries Engage in a Race to the Bottom? The Effect of Social Spending on FDI," World Development, Elsevier, vol. 44(C), pages 156-164.
    3. Häberli, Christian. & Jansen, Marion. & Monteiro, José-Antonio., 2012. "Regional trade agreements and domestic labour market regulation," ILO Working Papers 994700163402676, International Labour Organization.
    4. Hall Joshua C. & Lawson Robert A. & Wogsland Rachael, 2011. "The European Union and Economic Freedom," Global Economy Journal, De Gruyter, vol. 11(3), pages 1-16, September.

    More about this item

    Keywords

    economic integration; labor standards; comparative advantage; σ-convergence;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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