International Labor Standards and Southern Competition
This paper models the economic aspects of labor standards in an oligopolistic framework of three countries, incorporating labor-management negotiations in the North and monopsonic labor markets in Southern countries. Different from the literature, a higher LS not only requires a higher cost, but also benefits workers and induces them to work harder. Because of theselinks, Northern intervention, via import taxes or minimum LS regulation, may often have perverse effects on Southern countries. Nevertheless, such interventions may occur due to domestic unionization or pressure from global competition. Specifically, imposing a tariff against a certain Southern country to force up its LS does not work. Further, the tariff would shift production to another country. These shed light on why developing countries oppose including LS in WTO negotiations. We also find that union wages, employment and utility increase with a higher import tariff, which explains why unions are keen lobbies of raising LS in developing countries. Under minimum LS regulation in one Southern country, the LS and profits in the other Southern country and the utility of the Northern union may fall. Finally, as the empirical evidence shows, we demonstrate that multinational enterprises choose to locate in those developing countries whose LS is relatively higher rather than lower, because LS benefits workers and labor unions, and is thus productive.
|Date of creation:||Aug 2006|
|Contact details of provider:|| Postal: 2-1 Rokkodai, Nada, Kobe 657-8501 JAPAN|
Phone: +81-(0)78 803 7036
Fax: +81-(0)78 803 7059
Web page: http://www.rieb.kobe-u.ac.jp/index-e.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dixit, Avinash K, 1986. "Comparative Statics for Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(1), pages 107-122, February.
- James A. Brander & Barbara J. Spencer, 1984.
"Export Subsidies and International Market Share Rivalry,"
NBER Working Papers
1464, National Bureau of Economic Research, Inc.
- Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February.
- Kyle Bagwell & Robert W. Staiger, 2001. "The WTO as a Mechanism for Securing Market Access Property Rights: Implications for Global Labor and Environmental Issues," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 69-88, Summer.
- 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.
- Drusilla K. Brown, 2001.
"Labor Standards: Where Do They Belong on the International Trade Agenda?,"
Journal of Economic Perspectives,
American Economic Association, vol. 15(3), pages 89-112, Summer.
- Drusilla K. Brown & Alan V. Deardorff & Robert M. Stern, 2001. "Labor Standards: Where Do They Belong on the International Trade Agenda?," Discussion Papers Series, Department of Economics, Tufts University 0113, Department of Economics, Tufts University.
- Jafarey, Saqib & Lahiri, Sajal, 2002.
"Will trade sanctions reduce child labour?: The role of credit markets,"
Journal of Development Economics,
Elsevier, vol. 68(1), pages 137-156, June.
- Jafarey, Saqib & Lahiri, Sajal, 1999. "Will trade sanctions reduce child labour? The role of credit markets," Economics Discussion Papers 10004, University of Essex, Department of Economics.
- Mezzetti, C. & Dinopoulos, E., 1989.
"Domestic Unionization And Import Competition,"
337, California Davis - Institute of Governmental Affairs.
- Chau, Nancy H. & Kanbur, Ravi, 2000.
"The Race to the Bottom, From the Bottom,"
127681, Cornell University, Department of Applied Economics and Management.
- Brander, James A. & Spencer, Barbara J., 1988. "Unionized oligopoly and international trade policy," Journal of International Economics, Elsevier, vol. 24(3-4), pages 217-234, May.
- Leahy, Dermot & Montagna, Catia, 1999. "Unionisation and Foreign Direct Investment," CEPR Discussion Papers 2260, C.E.P.R. Discussion Papers.
- Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
When requesting a correction, please mention this item's handle: RePEc:kob:dpaper:193. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Office of Promoting Research Collaboration, Research Institute for Economics & Business Administration, Kobe University)
If references are entirely missing, you can add them using this form.