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Labor Standards and the World Trade Organization

Author

Listed:
  • Robert M. Stern

    (University of Michigan)

  • Katherine Terrell

    (University of Michigan)

Abstract
This policy brief takes the position that international labor standards should not be incorporated into the WTO and other trade agreements as we argue that this will not achieve either of the two professed goals: a) improving the wages and working conditions of workers in poor countries and b) keeping more jobs in the industrialized countries. In fact, empirical evidence shows that such mandates can reduce the number of workers with better working conditions and increase the number in poorer conditions, hence creating further inequality. The literature also shows that low labor standards do not provide developing countries with an unfair advantage in their export trade nor do they drive FDI. We recommend alternative policies be deployed through existing institutions. For the poor countries, sustainable improvement of the wages and working conditions of workers can only be achieved through solid economic and social development policies, deployed with the assistance of international organizations (regional banks, NGOs, etc). For the industrialized countries, we recommend that more effort be focused on preparing workers to be able to adapt to the evolving global economy. The process of economic change is complex and cannot be managed by mandates. The alternative policies we propose will be far more effective in making workers and the economies better off.

Suggested Citation

  • Robert M. Stern & Katherine Terrell, 2003. "Labor Standards and the World Trade Organization," Working Papers 499, Research Seminar in International Economics, University of Michigan.
    • Handle: RePEc:mie:wpaper:499
    as

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    File URL: http://fordschool.umich.edu/rsie/workingpapers/Papers476-500/r499.pdf
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    References listed on IDEAS

    as
    1. Carmen Pagés-Serra, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2000), pages 109-154, August.
    2. Brown, Charles, 1999. "Minimum wages, employment, and the distribution of income," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 32, pages 2101-2163, Elsevier.
    3. Carmen Pagés-Serra & James J. Heckman, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," Research Department Publications 4227, Inter-American Development Bank, Research Department.
    4. Drusilla K. Brown & Alan V. Deardorff & Robert M. Stern, 2009. "The Effects of Multinational Production on Wages and Working Conditions in Developing Countries," World Scientific Book Chapters, in: Globalization And International Trade Policies, chapter 17, pages 623-687, World Scientific Publishing Co. Pte. Ltd..
    5. Martín Rama, 2001. "The Consequences of Doubling the Minimum Wage: The Case of Indonesia," ILR Review, Cornell University, ILR School, vol. 54(4), pages 864-881, July.
    6. 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.
    7. Gindling, T.H. & Terrell, Katherine, 2005. "The effect of minimum wages on actual wages in formal and informal sectors in Costa Rica," World Development, Elsevier, vol. 33(11), pages 1905-1921, November.
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    Cited by:

    1. Gary Clyde Hufbauer & Yee Wong, 2004. "China Bashing 2004," Policy Briefs PB04-05, Peterson Institute for International Economics.
    2. Maria Artuso & Carolan McLarney, 2015. "A Race to the Top: Should Labour Standards be Included in Trade Agreements?," Vikalpa: The Journal for Decision Makers, , vol. 40(1), pages 1-14, March.
    3. Hurtado Inmaculada & Argerey Patricia, 2008. "Social Dumping: The Debate on a Multilateral Social Clause," Global Economy Journal, De Gruyter, vol. 8(1), pages 1-17, February.
    4. Scherrer, Christoph & Beck, Stefan, 2016. "Trade regulations and global production networks," GLU Working Papers 43, Global Labour University (GLU).
    5. Joshua Hall & Peter Leeson, 2007. "Good for the Goose, Bad for the Gander: International Labor Standards and Comparative Development," Journal of Labor Research, Springer, vol. 28(4), pages 658-676, September.

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