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The Effects of International Scrutiny on Manufacturing Workers: Evidence from the Rana Plaza Collapse in Bangladesh

Author

Listed:
  • Bossavie, Laurent

    (World Bank)

  • Cho, Yoon Y.

    (World Bank)

  • Heath, Rachel

    (University of Washington)

Abstract

After the tragic factory collapse of Rana Plaza in 2013, both the direct reforms and indirect responses of retailers have plausibly affected workers in the Ready Made Garment (RMG) sector in Bangladesh. These responses included a minimum wage increase, high profile but voluntary audits, and an increased reluctance to subcontract to smaller factories. This paper uses six rounds of the Labor Force Survey and adopts a synthetic control approach to evaluate the net effects of these changes on garment workers. While we find that working conditions did improve, we find evidence of adverse effects on several other outcomes for workers. In particular, while the reforms initially increased female workers' wages, their wages had fallen an estimated 20 percent three years after Rana Plaza. We also show suggestive evidence that female workers' contracts displayed a similar short-term increase and ultimate long-term decrease. Male workers, by contrast, if anything experienced only short-term adverse effects.

Suggested Citation

  • Bossavie, Laurent & Cho, Yoon Y. & Heath, Rachel, 2020. "The Effects of International Scrutiny on Manufacturing Workers: Evidence from the Rana Plaza Collapse in Bangladesh," IZA Discussion Papers 13782, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp13782
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    References listed on IDEAS

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    1. Naved, Ruchira & Rahman, Tabassum & Willan, Samantha & Jewkes, Rachel & Gibbs, Andrew, 2018. "Female garment workers’ experiences of violence in their homes and workplaces in Bangladesh: A qualitative study," Social Science & Medicine, Elsevier, vol. 196(C), pages 150-157.
    2. Eric A. Verhoogen, 2008. "Trade, Quality Upgrading, and Wage Inequality in the Mexican Manufacturing Sector," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 489-530.
    3. Minhaj Mahmud & Italo A. Gutierrez & Krishna B. Kumar & Shanthi Nataraj, 2017. "What Aspects of Formality Do Workers Value? Evidence from a Choice Experiment in Bangladesh," Working Papers WR-1197, RAND Corporation.
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    Cited by:

    1. Pamina Koenig & Sandra Poncet, 2019. "Reputation and (un)fair trade: Effects on French importers from the Rana Plaza collapse," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-02350112, HAL.
    2. Aleksandra Draganić & Nazmul Arefin, 2021. "Social Sustainability Challenges and the Role of Middle Managers: Case of the Ready-Made Garment Industryin Bangladesh," ICDD Working Papers 28, University of Kassel, Fachbereich Gesellschaftswissenschaften (Social Sciences), Internatioanl Center for Development and Decent Work (ICDD).
    3. Fernandes,Ana Margarida & Kee,Hiau Looi, 2020. "Gender Empowerment, Supply-Chain Linkages and Foreign Direct Investment : Evidence on Bangladesh," Policy Research Working Paper Series 9340, The World Bank.
    4. Pamina Koenig & Sandra Poncet, 2019. "Reputation and (un)fair trade: Effects on French importers from the Rana Plaza collapse," Post-Print halshs-02350112, HAL.
    5. Ana M. Fernandes & Hiau Looi Kee, . "Women empowerment, supply chain linkages and FDI: evidence from Bangladesh," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.

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    More about this item

    Keywords

    garment sector; working conditions; gender; minimum wage;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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