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

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.