The Impact of Better Work

50 Pages Posted: 6 Mar 2018

See all articles by Drusilla K. Brown

Drusilla K. Brown

Tufts University - Department of Economics

Rajeev H. Dehejia

New York University (NYU) - Robert F. Wagner Graduate School of Public Service; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA); CESifo

Raymond Robertson

Texas A&M University

Date Written: February 27, 2018

Abstract

The impact of Better Work (ILO/OFC) is assessed on costs, profits, productivity and business terms for firms in Vietnam, Indonesia and Jordan. Participation in Better Work has a positive productivity effect on Vietnamese and Indonesian firms. Productivity gains are captured by workers in the form of higher pay. Unit costs rise due to increased compliance with payment requirements such as the minimum wage, paying as promised and mandated promotions. Despite the increase in wages, profits for firms in Better Work Vietnam and Indonesia increase due to improved business terms such as larger orders and possibly an increase in price. The impact of Better Work Jordan suggests that exposure to the program for individual firms may have temporarily increased costs and lowered profits. However, the Jordanian apparel industry becomes more profitable over time, suggesting a positive country reputation effect. Participation in Better Work and firm performance are not jointly determined by manager quality. Early entrants into Better Work are, on average, high cost-low profit firms.

Keywords: high road, working conditions, supply chains, social compliance, International Labor Organization, supply chains

JEL Classification: D22, J81, O15, O31

Suggested Citation

Brown, Drusilla K. and Dehejia, Rajeev H. and Robertson, Raymond, The Impact of Better Work (February 27, 2018). Available at SSRN: https://ssrn.com/abstract=3130946 or http://dx.doi.org/10.2139/ssrn.3130946

Drusilla K. Brown (Contact Author)

Tufts University - Department of Economics ( email )

Medford, MA 02155
United States
617-627-3096 (Phone)
617-627-3917 (Fax)

Rajeev H. Dehejia

New York University (NYU) - Robert F. Wagner Graduate School of Public Service ( email )

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New York, NY 10012
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HOME PAGE: http://users.nber.org/~rdehejia/

National Bureau of Economic Research (NBER) ( email )

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HOME PAGE: http://users.nber.org/~rdehejia/

Institute for the Study of Labor (IZA) ( email )

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Germany

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Raymond Robertson

Texas A&M University ( email )

TAMU 4220
1004 George Bush Dr West
College Station, TX 77843
United States

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