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Chains of Love? Global Production and the Firm‐Level Diffusion of Labor Standards

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  • Edmund J. Malesky
  • Layna Mosley

Abstract

Under what conditions does the global economy serve as a means for the diffusion of labor standards and practices? We anticipate variation among internationally engaged firms in their propensity to improve labor standards. Upgrading is most likely when a firm's products exhibit significant cross‐market differences in markups, making accessing high‐standards overseas markets particularly profitable. Additionally, upgrading is more likely when lead firms attach a high salience to labor standards. Therefore, while participation in global production induces “trading up” behaviors among firms overall, the effect strength varies across industries. We test our expectations via a survey experiment, which queries foreign firms operating in Vietnam about their willingness to invest in labor‐related upgrading. We find strong evidence for the effect of markups on upgrading choices and suggestive evidence for the saliency mechanism.

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  • Edmund J. Malesky & Layna Mosley, 2018. "Chains of Love? Global Production and the Firm‐Level Diffusion of Labor Standards," American Journal of Political Science, John Wiley & Sons, vol. 62(3), pages 712-728, July.
    • Handle: RePEc:wly:amposc:v:62:y:2018:i:3:p:712-728
    DOI: 10.1111/ajps.12370
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    Cited by:

    1. Céline Carrère & Marcelo Olarreaga & Damian Raess, 2022. "Labor clauses in trade agreements: Hidden protectionism?," The Review of International Organizations, Springer, vol. 17(3), pages 453-483, July.
    2. Klymak, Margaryta, 2023. "The trade effects of information provision about forced and child labor," World Development, Elsevier, vol. 167(C).
    3. John S. Ahlquist & Layna Mosley, 2021. "Firm participation in voluntary regulatory initiatives: The Accord, Alliance, and US garment importers from Bangladesh," The Review of International Organizations, Springer, vol. 16(2), pages 317-343, April.
    4. Maxim Ananyev, 2019. "Political Economy of Cross-Border Income Shifting: A Protection Racket Approach," Melbourne Institute Working Paper Series wp2019n15, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    5. Raess, Damian & Wagner, Patrick, 2022. "South to north investment linkages and decent work in Brazil," Papers 1382, World Trade Institute.
    6. Hinrich Vos, . "Implications of the COVID-19 pandemic for human rights and modern slavery vulnerabilities in global value chains," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    7. Kolcava, Dennis & Smith, E. Keith & Bernauer, Thomas, 2022. "Public Preference Formation Towards Sustainable Global Supply Chains Policy," OSF Preprints 2hez9, Center for Open Science.
    8. Ananyev, Maxim, 2022. "Political economy of cross-border income shifting: A protection racket approach," Journal of Comparative Economics, Elsevier, vol. 50(4), pages 1087-1102.
    9. Liena Kano & Eric W. K. Tsang & Henry Wai-chung Yeung, 2020. "Global value chains: A review of the multi-disciplinary literature," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 577-622, June.

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