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Trade and labour standards: Will there be a race to the bottom?


  • Zhiqi Chen
  • Afshan Dar‐Brodeur


. We investigate whether strategic competition among developing countries for export market shares will lead to a “race‐to‐the‐bottom” (RTB) in labour standards. We consider an environment that is most conducive to an RTB, specifically in a model of strategic trade in which governments have incentives to lower the costs of their domestic firms. Our analysis shows that strategic trade considerations do not lead to an RTB. To the contrary, equilibrium labour standards involve higher levels of labour compensation than those in the absence of government intervention. Binding global trade rules that restrict export subsidies would move the labour standards closer to their efficient level. Résumé. Commerce et normes du travail: y aura‐t‐il un nivellement par le bas? Dans cet article, nous cherchons à savoir si, pour gagner des parts de marché à l’exportation, la compétition stratégique entre les pays en voie de développement engendrera un nivellement par le bas des normes du travail. À cette fin, nous nous appuyons sur un environnement largement propice à cette théorie, notamment dans un modèle commercial stratégique au sein duquel les gouvernements ont intérêt à baisser les coûts de leurs entreprises domestiques. Notre analyse montre que les considérations en matière de commerce stratégique n’engendrent aucun nivellement par le bas. À l’inverse, des normes du travail à l’équilibre impliquent une rémunération de la main d’œ uvre plus élevée qu’en l’absence de toute intervention gouvernementale. Le fait de contraindre les règles du commerce mondial limitant les subventions à l’exportation rapprochera les normes du travail de leur niveau d’efficacité.

Suggested Citation

  • Zhiqi Chen & Afshan Dar‐Brodeur, 2020. "Trade and labour standards: Will there be a race to the bottom?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(3), pages 916-948, August.
  • Handle: RePEc:wly:canjec:v:53:y:2020:i:3:p:916-948
    DOI: 10.1111/caje.12450

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    References listed on IDEAS

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    JEL classification:

    • J8 - Labor and Demographic Economics - - Labor Standards
    • F1 - International Economics - - Trade


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