Observations on International Labor Standards and Trade

This paper reviews the theoretical arguments for and against linking international labor standards to trade. Based on theory alone it is difficult to generalize about the effect of labor standards on efficiency and equity. Some economists have argued that international labor standards are merely disguised protectionism. An evaluation of determinants of support for legislation that would ban imports to the U.S. of goods made with child labor provides little support for the prevailing political economy view. In particular, Congressmen representing districts with relatively many unskilled workers, who are most likely to compete with child labor, are less likely to support a ban on imports made with child labor. Another finding is that the prevalence of child labor declines sharply with national income. Lastly, an analysis of compulsory schooling laws, which are often suggested as an alternative to prohibiting child labor, finds a tremendous amount of noncompliance in developing nations.