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Trade and labour standards: theory and new empirical evidence


  • Vivek Dehejia
  • Yiagadeesen Samy


Recent trade negotiations, both at the regional and multilateral level, have seen a resurgence of the issue of trade and labour standards. Labour interests in high-standards countries argue that low labour standards are an unfair source of comparative advantage, and that increasing imports from low-standards countries will have an adverse impact on wages and working conditions in high-standards countries, thus leading to a race to the bottom of standards. For low-standards countries, there is the fear that this is just a form of disguised protectionism and that the imposition of high labour standards upon them is equally unfair since it will erode their competitiveness, the latter being largely based on labour costs. Our objective in the present paper is to cast some light on the above debate from both a theoretical and empirical perspective. In particular, we first discuss some possible theoretical links between labour standards and comparative advantage through their effects on the terms of trade. We then investigate empirically the relationship between labour standards, comparative advantage and export performance. Overall, our empirical results suggest that caution should be exercised before drawing broad conclusions on the magnitude and direction of these effects.

Suggested Citation

  • 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.
  • Handle: RePEc:taf:jitecd:v:13:y:2004:i:2:p:179-198 DOI: 10.1080/0963819042000218692

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    References listed on IDEAS

    1. Cigno, Alessandro & Rosati, Furio C. & Guarcello, Lorenzo, 2002. "Does Globalization Increase Child Labor?," World Development, Elsevier, vol. 30(9), pages 1579-1589, September.
    2. 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.
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    Cited by:

    1. 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.
    2. repec:dau:papers:123456789/1546 is not listed on IDEAS
    3. Angela Akorsu, 2013. "Labour Standards Application In The Informal Economy Of Ghana: The Patterns And Pressures," Economic Annals, Faculty of Economics, University of Belgrade, vol. 58(196), pages 157-176, January –.
    4. 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.
    5. Boodoo, Muhammad Umar, 2016. "Does mandatory CSR reporting regulation lead to improved Corporate Social Performance? Evidence from India," LSE Research Online Documents on Economics 67559, London School of Economics and Political Science, LSE Library.
    6. Hayakawa, Kazunobu, 2017. "Effects of labor standard on trade : evidence from U.S. imports of coffee and tobacco," IDE Discussion Papers 669, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    7. Yiagadeesen Samy & Vivek H. Dehejia, 2008. "Trade and Labor Standards in the European Union: A Gravity Model Approach," Carleton Economic Papers 08-08, Carleton University, Department of Economics.
    8. Brown, Drusilla & Dehejia, Rajeev & Robertson, Raymond, 2016. "Laws, Costs, Norms, and Learning: Improving Working Conditions in Developing Countries," IZA Discussion Papers 10025, Institute for the Study of Labor (IZA).
    9. Kamata, Isao, 2016. "Labor clauses in regional trade agreements and effects on labor conditions : an empirical analysis," IDE Discussion Papers 609, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    10. repec:spr:ijlaec:v:60:y:2017:i:1:d:10.1007_s41027-017-0082-3 is not listed on IDEAS
    11. repec:laf:wpaper:201102 is not listed on IDEAS
    12. Isao Kamatai, 2014. "Regional Trade Agreements with Labor Clauses: Effects on Labor Standards and Trade," Discussion papers e-13-007, Graduate School of Economics Project Center, Kyoto University.
    13. KAMATA Isao, 2014. "Regional Trade Agreements with Labor Clauses: Effects on labor standards and trade," Discussion papers 14012, Research Institute of Economy, Trade and Industry (RIETI).
    14. Isao Kamata, 2015. "Labor Clauses in Regional Trade Agreements and Effects on Labor Conditions: An Empirical Analysis," Discussion papers e-14-019, Graduate School of Economics Project Center, Kyoto University.
    15. Krishna Chaitanya Vadlamannati, 2015. "Rewards of (Dis)Integration," ILR Review, Cornell University, ILR School, vol. 68(1), pages 3-27, January.
    16. Neumayer, Eric & Soysa, Indra de, 2006. "Globalization and the Right to Free Association and Collective Bargaining: An Empirical Analysis," World Development, Elsevier, vol. 34(1), pages 31-49, January.
    17. Eric Neumayer & Indra de Soysa, 2004. "Globalization and the Right to Free Association and Collective," Labor and Demography 0410006, EconWPA, revised 22 Apr 2005.
    18. James Dean & Vivek H. Dehejia & Elinor Johansen & Sarah Turney, 2004. "Optimal Globalization and National Welfare," Carleton Economic Papers 04-17, Carleton University, Department of Economics.
    19. repec:dau:papers:123456789/3202 is not listed on IDEAS
    20. Jean-Marie Cardebat & Alexandru Dimitrescu, 2011. "Social Responsibility of the countries and their international trade : A gravitational approach," Larefi Working Papers 1102, Larefi, Université Bordeaux 4.
    21. Zhiqi Chen & Afshan Dar-Brodeur, 2014. "Trade and Labour Standards: Will There Be a Race to the Bottom?," Carleton Economic Papers 14-10, Carleton University, Department of Economics.
    22. Michaël Bonnal, 2010. "Export Performance, Labor Standards and Institutions: Evidence from a Dynamic Panel Data Model," Journal of Labor Research, Springer, vol. 31(1), pages 53-66, March.


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