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Labor compliance programs in developing countries and trade flows: Evidence from Better Work

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  • Robertson, Raymond

Abstract

Exporting apparel supports economic development by creating formal-sector employment opportunities for workers (especially women) whose best alternative domestic employment opportunities are informal work or agriculture. Apparel production is also highly scrutinized due to concerns about poor working conditions. The question of whether programs to improve working conditions are associated with more or less apparel exports remains a central concern to both current and potential apparel-exporting developing-country governments. This study estimates the difference in exports following country-level initiation of the ILO-IFC’s Better Work program that currently operates in 10 apparel-exporting developing countries and has a well-established positive effect on working conditions in participating apparel-exporting factories. Since the treatment time for Better Work varies by country, we apply the Callaway–Sant’anna​ time-varying-treatment difference-in-difference event study to the gravity-trade literature. The event study approach illustrates differences in post-treatment from pre-treatment trends. The results show that apparel exports increase significantly following the initiation of the Better Work program relative to apparel-exporting countries that did not enter Better Work, but total trade does not.

Suggested Citation

  • Robertson, Raymond, 2023. "Labor compliance programs in developing countries and trade flows: Evidence from Better Work," Economics Letters, Elsevier, vol. 228(C).
    • Handle: RePEc:eee:ecolet:v:228:y:2023:i:c:s0165176523001878
    DOI: 10.1016/j.econlet.2023.111162
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    References listed on IDEAS

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    1. Günseli Berik & Yana Van Der Meulen Rodgers, 2010. "Options for enforcing labour standards: Lessons from Bangladesh And Cambodia," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(1), pages 56-85.
    2. Raymond Robertson & Drusilla Brown & Rajeev Dehejia, 2021. "Working conditions and factory survival: Evidence from better factories Cambodia," Review of Development Economics, Wiley Blackwell, vol. 25(1), pages 228-254, February.
    3. Raymond Robertson, 2020. "Lights On: How Transparency Increases Compliance in Cambodian Global Value Chains," ILR Review, Cornell University, ILR School, vol. 73(4), pages 939-968, August.
    4. Kimberly Ann Elliott & Richard B. Freeman, 2003. "Can Labor Standards Improve under Globalization?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 338, April.
    5. Maddalena Conte & Pierre Cotterlaz & Thierry Mayer, 2022. "The CEPII Gravity Database," Working Papers 2022-05, CEPII research center.
    6. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    7. Sant’Anna, Pedro H.C. & Zhao, Jun, 2020. "Doubly robust difference-in-differences estimators," Journal of Econometrics, Elsevier, vol. 219(1), pages 101-122.
    8. Melanie Beresford, 2009. "The Cambodian clothing industry in the post-MFA environment: a review of developments," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 14(4), pages 366-388.
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