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Globalization and Workers in Developing Countries

  • Martin Rama

    (Research Department, World Bank)

Stories on the positive and negative effects of globalization on workers in developing countries abound. But a comprehensive picture is missing and many of the stories are ideologically charged. This paper reviews the academic literature on the subject, including several studies currently under way, and derives the complications for public policy. First, it deals with the effects of openness to trade, foreign direct investment and financial crisis on averages wages. Second, it discusses the impact of exposure to world markets on the dispersion of wages by occupation, skill and gender. Third, it describes the pattern of job destruction and job creation associated with globalization. Because these two processes are not synchronized, the fourth issue addressed is the impact an unemployment rates. Fifth, the paper reviews the labor market policies that can be used to offset the adverse impacts of globalization on employment and labor earnings. Finally, it discusses how the international community could encourage developing countries to adopt sound labor market policies in the context of globalization.

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Paper provided by East-West Center, Economics Study Area in its series Economics Study Area Working Papers with number 41.

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Length: 46 pages
Date of creation: Feb 2002
Date of revision:
Handle: RePEc:ewc:wpaper:wp41
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  1. Basu, Kaushik, 1998. "Child labor : cause, consequence, and cure, with remarks on International Labor Standards," Policy Research Working Paper Series 2027, The World Bank.
  2. Anderson, Kym, 1996. "Social Policy Dimensions of Economic Integration: Environmental and Labour Standards," CEPR Discussion Papers 1440, C.E.P.R. Discussion Papers.
  3. Fretwell, David H. & Benus, Jacob & O'Leary, Christopher J., 1999. "Evaluating the impact of active labor programs : results of cross country studies in Europe and Central Asia," Social Protection Discussion Papers 20131, The World Bank.
  4. Butcher, Kristin F. & Rouse, Cecilia Elena, 2001. "Wage effects of unions and industrial councils in South Africa," Policy Research Working Paper Series 2520, The World Bank.
  5. Richard B. Freeman & Remco Oostendorp, 2000. "Wages Around the World: Pay Across Occupations and Countries," NBER Working Papers 8058, National Bureau of Economic Research, Inc.
  6. Takatoshi Ito & Anne O. Krueger, 1997. "Regionalism versus Multilateral Trade Arrangements, NBER-EASE Volume 6," NBER Books, National Bureau of Economic Research, Inc, number ito_97-1, July.
  7. Beyer, Harald & Rojas, Patricio & Vergara, Rodrigo, 1999. "Trade liberalization and wage inequality," Journal of Development Economics, Elsevier, vol. 59(1), pages 103-123, June.
  8. Belser, Patrick & Rama, Martin, 2001. "State ownership and labor redundancy - estimates based on enterprise-level data from Vietnam," Policy Research Working Paper Series 2599, The World Bank.
  9. Robert C. Feenstra & Gordon H. Hanson, 1995. "Foreign Direct Investment and Relative Wages: Evidence from Mexico's Maquiladoras," NBER Working Papers 5122, National Bureau of Economic Research, Inc.
  10. Drusilla K. Brown & Alan V. Deardorff & Robert M. Stern, 2001. "U.S. Trade and Other Policy Options and Programs to Deter Foreign Exploitation of Child Labor," NBER Chapters, in: Topics in Empirical International Economics: A Festschrift in Honor of Robert E. Lipsey, pages 233-262 National Bureau of Economic Research, Inc.
  11. Datt, Gaurav & Ravallion, Martin, 1994. "Transfer Benefits from Public-Works Employment: Evidence for Rural India," Economic Journal, Royal Economic Society, vol. 104(427), pages 1346-69, November.
  12. Aitken, Brian & Harrison, Ann & Lipsey, Robert E., 1996. "Wages and foreign ownership A comparative study of Mexico, Venezuela, and the United States," Journal of International Economics, Elsevier, vol. 40(3-4), pages 345-371, May.
  13. Fallon, Peter R & Lucas, Robert E B, 1991. "The Impact of Changes in Job Security Regulations in India and Zimbabwe," World Bank Economic Review, World Bank Group, vol. 5(3), pages 395-413, September.
  14. Kyle Bagwell & Robert W. Staiger, 1998. "The Simple Economics of Labor Standards and the GATT," NBER Working Papers 6604, National Bureau of Economic Research, Inc.
  15. Malathy Duraisamy, 2000. "Child Schooling and Child Work in India," Econometric Society World Congress 2000 Contributed Papers 0837, Econometric Society.
  16. Alvaro Forteza & Martín Rama, 2000. "Labor Market "Rigidity" and the Success of Economic Reforms Across more than One Hundred Countries," Documentos de Trabajo (working papers) 0600, Department of Economics - dECON.
  17. Assaad, Ragui, 1999. "Matching Severance Payments with Worker Losses in the Egyptian Public Sector," World Bank Economic Review, World Bank Group, vol. 13(1), pages 117-53, January.
  18. Alvaro Forteza & Martin Rama, 2006. "Labor Market 'Rigidity' and the Success of Economic Reforms Across More Than 100 Countries," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 9(1), pages 75-105.
  19. Cameron, L. & Worswick, C., 1998. "Education Expenditure Responses to Crop Loss in Indonesia: A Gender Bias," Department of Economics - Working Papers Series 636, The University of Melbourne.
  20. Krishna, Pravin & Mitra, Devashish & Chinoy, Sajjid, 2001. "Trade liberalization and labor demand elasticities: evidence from Turkey," Journal of International Economics, Elsevier, vol. 55(2), pages 391-409, December.
  21. Dollar, David & Kraay, Aart, 2001. "Trade, growth, and poverty," Policy Research Working Paper Series 2615, The World Bank.
  22. Brown, D.K. & Dearorff, A.V. & Stern, R.M., 1993. "International Labor Standards and Trade: A Theoretical Analysis," Working Papers 333, Research Seminar in International Economics, University of Michigan.
  23. William T. Dickens & Kevin Lang, 1991. "An Analysis of the Nature of Unemployment in Sri Lanka," NBER Working Papers 3777, National Bureau of Economic Research, Inc.
  24. Basu, Kaushik & Van, Pham Hoang, 1998. "The Economics of Child Labor," American Economic Review, American Economic Association, vol. 88(3), pages 412-27, June.
  25. Bell, Linda A, 1997. "The Impact of Minimum Wages in Mexico and Colombia," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages S102-35, July.
  26. Assaad, Ragui, 1997. "The Effects of Public Sector Hiring and Compensation Policies on the Egyptian Labor Market," World Bank Economic Review, World Bank Group, vol. 11(1), pages 85-118, January.
  27. Jean-Marie Baland & James A. Robinson, 2000. "Is Child Labor Inefficient?," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 663-679, August.
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