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

Author

Listed:
  • Bossavie,Laurent Loic Yves
  • Cho,Yoonyoung
  • Heath,Rachel

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 difference-in-difference approach to evaluate the net effects of these changes on garment workers, compared with workers in plausible control groups. Although employers have improved working conditions as intended by the reforms, the authors evidence adverse effects on several dimensions workers'outcomes in the years following Rana Plaza. While the reforms initially increased female workers'wages and the likelihood to hold a formal contract in the months that immediately followed Rana Plaza, they then declined in the following years. In contrast, no adverse effect is detected for male workers. The results suggest that regulations initially aimed at helping workers can have unintended adverse effects on some dimensions of workers'outcomes.

Suggested Citation

  • Bossavie,Laurent Loic Yves & Cho,Yoonyoung & Heath,Rachel, 2019. "The Effects of International Scrutiny on Manufacturing Workers : Evidence from the Rana Plaza Collapse in Bangladesh," Policy Research Working Paper Series 9065, The World Bank.
  • Handle: RePEc:wbk:wbrwps:9065
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    References listed on IDEAS

    as
    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," PSE Working Papers halshs-02418274, HAL.
    2. Ana Margarida Fernandes & Hiau-Looi Kee, 2020. "Gender Empowerment, Supply-Chain Linkages and Foreign Direct Investment: Evidence on Bangladesh," CESifo Working Paper Series 8538, CESifo.
    3. Pamina Koenig & Sandra Poncet, 2019. "Reputation and (un)fair trade: Effects on French importers from the Rana Plaza collapse," Working Papers halshs-02418274, HAL.
    4. 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.

    More about this item

    Keywords

    Work&Working Conditions; Gender and Development; International Trade and Trade Rules; Labor Markets;

    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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