How Bad is Globalization for Labour Standards in the North?

Gutenberg School of Management and Economics Discussion Paper No. 1011

29 Pages Posted: 10 Sep 2010

See all articles by Alejandro Donado

Alejandro Donado

Frankfurt School of Finance & Management gemeinnützige GmbH

Klaus Wälde

University of Mainz; CESifo (Center for Economic Studies and Ifo Institute); UCL at Louvain la Neuve

Date Written: August 19, 2010

Abstract

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. Quantitatively, these effects are small and overcompensated by gains in the South. The existing empirical literature tends to support our findings.

Keywords: occupational health and safety, trade unions, international trade, welfare

JEL Classification: J51, J81, F16, F21

Suggested Citation

Donado, Alejandro and Wälde, Klaus, How Bad is Globalization for Labour Standards in the North? (August 19, 2010). Gutenberg School of Management and Economics Discussion Paper No. 1011, Available at SSRN: https://ssrn.com/abstract=1673865 or http://dx.doi.org/10.2139/ssrn.1673865

Alejandro Donado

Frankfurt School of Finance & Management gemeinnützige GmbH ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

Klaus Wälde (Contact Author)

University of Mainz ( email )

Mainz School of Management and Economics
Mainz, 55128
Germany
+49 6131 3920143 (Phone)

HOME PAGE: http://www.waelde.com

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

UCL at Louvain la Neuve

Place Montesquieu, 3
Louvain-la-Neuve, 1348
Belgium

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