Aligning Rights and Incentives
Chapter 5: Labor standards around the world: a quantitative examination
AbstractIn this chapter we use quantitative data to examine what country-level factors can facilitate improvements in labor standards. Our most consistent finding is that a country’s level of development shapes its labor standards. Beyond economic development, our analysis highlights how an examination of a full sample of countries produces different conclusions than a sample comprised only of developing countries particularly important in global supply chains. We also find that distinct sets of factors may be associated with the protection of freedom of association and collective bargaining rights on the one hand, and patterns of enforcement by state authorities on the other. Across these differences, our analysis suggests which features of government can matter. Democracy and the power of left-wing political parties are sometimes associated with improvements in labor standards. Although state capacity is a powerful explanatory factor across all countries, when examining supply-chain-intensive countries alone state capacity offers little explanatory power beyond what is already explained by differences in economic development. That is, given that wealthier countries tend to have greater state capacity, differences in state capacity are not associated with differences in labor standards once we have taken development into account. We find some evidence supporting hypotheses regarding differences between foreign direct investment (FDI) and arm’s-length contracting (Mosley and Uno, 2007; Mosley, 2010) and regarding the diffusion of labor standards via global supply chains (Greenhill, et al., 2009). Countries that have ratified more ILO conventions tend to have better labor rights but not better labor enforcement.
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