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Core Labor Standards and Competitiveness: Implications for Global Trade Policy
Author(s) -
Martin Will,
Maskus Keith E.
Publication year - 2001
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.00281
Subject(s) - economics , freedom of association , productivity , protectionism , core (optical fiber) , collective bargaining , bargaining power , labour economics , argument (complex analysis) , race to the bottom , market power , product market , international trade , international economics , market economy , globalization , macroeconomics , microeconomics , human rights , biochemistry , chemistry , materials science , monopoly , incentive , political science , law , composite material
One of the principal arguments for inclusion of core labor standards in the WTO is that weak labor standards provide an illegitimate boost to competitiveness and may result in a “race to the bottom” in labor standards worldwide. This paper shows that, if the violation of labor standards results from discrimination against particular workers in export industries, employment, output, and competitiveness will be reduced since employment is determined by the short side of the market. If the problems arise from abuse of market power by employers, competitiveness will be similarly reduced. Only if freedom of association and collective bargaining were intended to allow workers in some sectors to restrict output and drive up wages would the absence of these standards raise competitiveness. However, if product markets are competitive, it is likely that association rights would increase output and competitiveness by raising productivity. The competitiveness argument seems either to reflect analytical confusion or to represent a cover for protectionist interests.