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Economic Globalization and Labor Rights: a Disaggregated Analysis

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Abstract

Does economic globalization create a “race to the bottom” or a “race to the top” in labor rights practices? Despite significant research on the possible impact of economic globalization on labor conditions, little consensus exists as to whether and what forms of economic openness might help or undermine labor rights. In this study, we illustrate the significance of considering the two distinct processes of de facto and de jure globalization. We argue that whereas de facto globalization in the form of trade and financial transactions is likely to result in worse labor rights practices, de jure globalization that entails regulations to facilitate these transactions is likely to have a positive effect on labor conditions. Combining time-series, cross-national data on labor rights with data on economic globalization, we find significant evidence of the divergent effects of de facto and de jure globalization on labor rights practices. Results also indicate that the labor rights effects of de facto and de jure globalization are stronger for trade than financial globalization. We further show that the effects of economic globalization apply to both collective and substantive labor rights practices.

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Notes

  1. Even in the absence of economic threats, some countries might still be inclined to commit to protect labor rights to satisfy their domestic constituency. Specifically, some governments might surmise that signing onto PTAs and other trade or financial agreements would be more likely to be supported by their domestic audience if they also commit to improve labor practices along with other social and economic policies.

  2. The other two major data sources used in the literature include the Cingranelli-Richards (CIRI) database (Cingranelli et al. 2014) and the collective labor rights dataset by Mosley and Uno (2007). These datasets are, however, less appropriate for our purposes. The CIRI dataset contains only one three-category labor rights variables available for the 1981–2011 period. It captures the government’s recognition and enforcement of labor rights and thus does not separate labor rights practices from labor rights laws. The collective labor rights dataset collected by Mosley and Uno, on the other hand, has two separate variables for labor rights laws and practices for the years spanning 1989 to 2004. Yet because the data only cover collective labor rights, it excludes non-collective labor rights such as minimum wage, occupational safety, and forced labor that are also likely to be affected by economic globalization.

  3. We ran two diagnostic tests to check for the autocorrelation and homoscedasticity correlation. The Wooldridge test for autocorrelation (temporal dependence) rejects the null hypothesis of no first-order autocorrelation. White’s test rejects the null hypothesis of homoscedasticity in our main models.

  4. We also report models in the Appendix estimated with a sample comprising only non-OECD countries (see Tables 3 and 4). We do so to make sure the results are not driven by the inclusion of developed countries in the sample. Developed countries, on average, not only have higher levels of respect for labor rights, but also more involvement in the global economy through trade and investment. Hence, their inclusion in the sample might bias the analysis. The results in the restricted sample are similar to the ones reported in the main analysis, confirming that the use of a global sample does not lead to biased estimates. While we do not report them in the article, we also ran additional models with country and year fixed-effects to make sure unobserved country or year specific factors do not bias the results. We find similar results in the fixed effects models.

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Authors and Affiliations

  1. Department of Political Science, University of Memphis, Memphis, TN, USA

    Dursun Peksen & Jacob M. Pollock

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  1. Dursun Peksen
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Correspondence to Dursun Peksen.

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Appendix

Appendix

Table 3 Summary statistics
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Table 4 OLS models with the restricted sample (less developed countries sample)
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Table 5 Ordered logit models with the restricted sample (less developed countries)
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Table 6 List of countries
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Table 7 Correlation matrix—economic globalization variables
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Peksen, D., Pollock, J.M. Economic Globalization and Labor Rights: a Disaggregated Analysis. Hum Rights Rev 22, 279–301 (2021). https://doi.org/10.1007/s12142-021-00628-y

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