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How bad is globalization for labour standards in the north?

  • Donado, Alejandro
  • Wälde, Klaus

We analyse a world consisting of 'the North' and 'the South' where labour standards in the North are set by trade unions. Standards set by unions tend to increase output and welfare. There are no unions in the South and work standards are suboptimal. Trade between these two countries can imply a reduction in work standards in the North. Moreover, when trade unions are established in the South, the North, including northern unions, tend to lose out. Quantitatively, these effects are small and overcompensated for by gains in the South. The existing empirical literature tends to support our findings.

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Paper provided by University of Würzburg, Chair for Monetary Policy and International Economics in its series W.E.P. - Würzburg Economic Papers with number 84.

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Date of creation: 2010
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Handle: RePEc:zbw:wuewep:84
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  1. Aloi, Marta & Leite-Monteiro, Manuel & Lloyd-Braga, Teresa, 2009. "Unionized labor markets and globalized capital markets," Journal of International Economics, Elsevier, vol. 78(1), pages 149-153, June.
  2. Edmonds, Eric V., 2007. "Child Labor," IZA Discussion Papers 2606, Institute for the Study of Labor (IZA).
  3. Tito Boeri & Michael C. Burda, 2008. "Preferences for Collective versus Individualised Wage Setting," SFB 649 Discussion Papers SFB649DP2008-021, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  4. Levine, David I. & Rothman, Dov, 2006. "Does trade affect child health?," Journal of Health Economics, Elsevier, vol. 25(3), pages 538-554, May.
  5. Drusilla K. Brown, 2000. "International Trade and Core Labor Standards: A Survey of the Recent Literature," Discussion Papers Series, Department of Economics, Tufts University 0005, Department of Economics, Tufts University.
  6. Chau, Nancy H & Kanbur, Ravi, 2001. "The Race To the Bottom, From the Bottom," CEPR Discussion Papers 2687, C.E.P.R. Discussion Papers.
  7. Mihir C. Desai & C. Fritz Foley & James R. Hines Jr., 2005. "Foreign Direct Investment and the Domestic Capital Stock," NBER Working Papers 11075, National Bureau of Economic Research, Inc.
  8. 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.
  9. Boulhol, Herv, 2009. "Do capital market and trade liberalization trigger labor market deregulation?," Journal of International Economics, Elsevier, vol. 77(2), pages 223-233, April.
  10. Booth, Alison L & Chatterji, Monojit, 1998. "Unions and Efficient Training," Economic Journal, Royal Economic Society, vol. 108(447), pages 328-43, March.
  11. Ronald B. Davies & Annie Voy, 2007. "The Effect of FDI on Child Labor," The Institute for International Integration Studies Discussion Paper Series iiisdp215, IIIS.
  12. Alejandro Donado & Klaus Wälde, 2008. "Trade Unions Go Global!," CESifo Working Paper Series 2368, CESifo Group Munich.
  13. Kimberly Ann Elliott & Richard B. Freeman, 2003. "Can Labor Standards Improve under Globalization?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 338.
  14. Naylor, Robin, 1999. "Union Wage Strategies and International Trade," Economic Journal, Royal Economic Society, vol. 109(452), pages 102-25, January.
  15. Nirvikar Singh, 2004. "The Impact of International Labor Standards: A Survey of Economic Theory," International Trade 0412007, EconWPA.
  16. Eric Neumayer & Indra de Soysa, 2003. "Trade Openness, Foreign Direct Investment and Child Labor," International Trade 0312001, EconWPA, revised 16 Mar 2004.
  17. Eckel, Carsten & Egger, Hartmut, 2009. "Wage bargaining and multinational firms," Journal of International Economics, Elsevier, vol. 77(2), pages 206-214, April.
  18. Mezzetti, Claudio & Dinopoulos, Elias, 1991. "Domestic unionization and import competition," Journal of International Economics, Elsevier, vol. 31(1-2), pages 79-100, August.
  19. 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.
  20. Marcella Alsan & David E. Bloom & David Canning, 2004. "The Effect of Population Health on Foreign Direct Investment," NBER Working Papers 10596, National Bureau of Economic Research, Inc.
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