Harrison, Ann and Scorse, Jason (2003): Globalization's impact on compliance with labor standards. Published in: Brookings Trade Forum 2004 (2004): pp. 45-82.
Download (5MB) | Preview
In an effort to shed some light on the larger question of labor standardsvand globalization, we seek to examine compliance with minimum wage legislation in Indonesia. Indonesia is an ideal case study because the govern ment made minimum wages a central component of its labor market policies in the 1990s. During this time, minimum wages quadrupled in nominal terms and doubled in real terms.
In this paper we estimate the relationship between international competition and compliance with the statutory minimum wage in Indonesia. We identify firms facing international competition with two plant-level indica tors. First, we use the plant's export orientation as one measure of international competition. Second, we use the plant's foreign ownership as another measure of international competition. Critics claim that foreign firms are exploiting foreign workers, although our research on developing countries has shown that foreign enterprises are more likely to pay higher wages. This framework provides a direct test of the relationship between meas ures of globalization and labor standards, as defined by compliance with the regional minimum wage.
|Item Type:||MPRA Paper|
|Original Title:||Globalization's impact on compliance with labor standards|
|Keywords:||globalization; minimum wages; foreign investment; corporate social responsibility|
|Subjects:||F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International Business
J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs
|Depositing User:||Ann E. Harrison|
|Date Deposited:||06. Feb 2012 02:45|
|Last Modified:||12. Feb 2013 19:55|
Aitken, Brian, Gordon Hanson, and Ann Harrison. 1997. "Spillovers, Foreign Investment, and Export Behavior." Journal of International Economics 43 (August): 103-32.
Aitken, Brian, Ann Harrison, and Robert Lipsey. 1996. "Wages and Foreign Ownership: A Comparative Study of Mexico, Venezuela, and the United States." Journal of International Economics 40 (3^t): 345-71.
Alatas, Vivi, and Lisa Cameron. 2003. "The Impact of Minimum Wages on Employment in a Low-Income Country: An Evaluation using the Difference-in-Differences Approach." Policy Research Paper 2985. Washington: World Bank.
Ashenfelter, Orley, and Robert S. Smith. 1979. "Compliance with Minimum Wage Law." Journal of Political Economy 87 (2): 333-50.
Bell, Linda. 1997. "The Impact of Minimum Wages in Mexico and Colombia." Journal of Labor Economics 15 (3): S102-35.
Brown, Drusilla, Alan Deardorff, and Robert Stem. 2003. 'The Effects of Multinational Production on Wages and Working Conditions in Developing Countries." Working Paper 9669. Cambridge, Mass.: National Bureau of Economic Research (April).
Card, David, and Alan Krueger. 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania." American Economic Review 84 (4): 772-93.
-. 1995. Myth and Measurement: The New Economics of the Minimum Wage.Princeton University Press.
Chau, Nancy H., and Ravi Kanbur. 2001. "The Adoption of International Labor Standard Conventions: Who, When, and Why?" In Brookings Trade Forum 2001, edited by Dani Rodrik and Susan Collins, 113^6. Brookings.
Currie, Janet, and Ann Harrison. 1997. "Sharing the Costs: The Impact of Trade Reform on Capital and Labor in Morocco." Journal of Labor Economics 15 (3): S44-S71.
Edmonds, Eric, and Nina Pavcnik. 2001. "Does Globalization Increase Child Labor? Evidence from Vietnam." Working Paper 1-50. Dartmouth College.
Elliott, Kimberly Ann. 1998a. "Preferences for Workers? Worker Rights and the U.S. Generalized System of Preferences." Speech prepared for the faculty spring conference. Calvin College, Grand Rapids, Mich., May 28-30.
-. 1998b. "International Labor Standards and Trade: What Should Be Done?" In Launching New Global Trade Talks: An Action Agenda, edited by Jeffrey Schott, 171-75. Washington: Institute for International Economics.
-. 2000. "Getting Beyond No ... ! Promoting Worker Rights and Trade." In The WTO after Seattle, edited by Jeffrey J. Schott, 187-204. Washington: Institute for International Economics.
Elliott, Kimberly Ann, and Richard B. Freeman. 2003. Can Labor Standards Improve under Globalization? Washington: Institute for International Economics. 96 Brookings Trade Forum: 2003
Eskeland, Gunnar, and Ann Harrison. 2003. "Moving to Greener Pastures? Multinationals and the Pollution Haven Hypothesis." Journal of Development Econom ics 70 (1): 1-23.
Harrison, Ann, and Jason Scorse. 2003. 'The Nike Effect: Anti-Sweatshop Activists and Labor Market Outcomes in Indonesia." University of California, Berkeley.
International Labor Office. 2000. "Your Voice at Work: Global Report under the Follow-Up to the ILO Declaration on Fundamental Principles and Rights at Work." Report of the director-general to the International Labor Conference, Session 88. Geneva (June).
-. 2001. "The Elimination of all Forms of Forced or Compulsory Labor: Global Report under the Follow-Up to the ILO Declaration on Fundamental Principles and Rights at Work." Report of the director-general to the Interna tional Labor Conference, Session 89. Geneva (June).
-. 2002. "A Future without Child Labor: Global Report under the Follow Up to the ILO Declaration on Fundamental Principles and Rights at Work." Report of the director-general to the International Labor Conference, Session 90. Geneva (June).
-. 2003. 'Time for Equality at Work: Global Report under the Follow-Up to the ILO Declaration on Fundamental Principles and Rights at Work." Report of the director-general to the International Labor Conference, Session 91. Geneva (June).
Maloney, William F., and Jairo Nunez M?ndez. 2003. "Measuring the Impact of Minimum Wages: Evidence from Latin America." Working Paper 9800. Cambridge, Mass.: National Bureau of Economic Research (June).
Maskus, Keith. 1996. "Should Core Labor Standards be Imposed through Interna tional Trade Policy?" Working Paper 1817. Washington: World Bank.
Rama, Martin. 1996. "The Consequences of Doubling the Minimum Wage: The Case of Indonesia." Working Paper 1643. Washington: World Bank.
Ann Harrison and Scorse, Jason. 2003. "Do Foreign Firms Pay More: Evidence from the Indonesian Manufacturing Sector 1990-1999." Working Paper. University of California, Berkeley.
SMERU. 2001. "Wage and Employment Effects of Minimum Wage Policy in the Indonesian Urban Labor Market." Research Report. SMERU Research Institute.
Strobl, Eric, and Frank Walsh. 2000. "Minimum Wages and Compliance: The Case of Trinidad and Tobago." Working Paper 01/12. University College Dublin.