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Economic Competition, Policy Interdependence, and Labour Rights

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  • Zhiyuan Wang

Abstract

Extant scholarship treats national policies concerning labour rights as a function of economic factors and yet neglects influences of policies among economically competing states. Relying on the policy interdependence theory, this study argues that labour rights policy in a state is dependent on its economic competitors’ labour policy decisions. It specifically maintains that the intensifying competition for foreign direct investment and exports as well as against imports channels negative externalities of deteriorating labour protection in competing states which drives expansive downward policy mimicking and leads to a global decline in labour rights – a race to the bottom. Utilising spatial econometric technique to analyse a new data on labour rights for the period 1994–2009, it finds that labour rights practices are interdependent among economic competitors and experience global deteriorations; whereas labour rights laws remain largely independent due to high policy and reputational costs of lowering them and show more fluctuations.

Suggested Citation

  • Zhiyuan Wang, 2018. "Economic Competition, Policy Interdependence, and Labour Rights," New Political Economy, Taylor & Francis Journals, vol. 23(6), pages 656-673, November.
    • Handle: RePEc:taf:cnpexx:v:23:y:2018:i:6:p:656-673
    DOI: 10.1080/13563467.2018.1384452
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    Cited by:

    1. Messerschmidt, Luca & Janz, Nicole, 2023. "Unravelling the ‘race to the bottom’ argument: Foreign direct investment and different types of labour rights," World Development, Elsevier, vol. 161(C).
    2. Alice Evans, 2019. "Incentivising Pro-Labour Reforms," CID Working Papers 349, Center for International Development at Harvard University.
    3. Kuokštis, Vytautas & Asali, Muhammad & Spurga, Simonas Algirdas, 2022. "Labor market flexibility and exchange rate regimes," European Journal of Political Economy, Elsevier, vol. 75(C).
    4. Luca Messerschmidt & Nicole Janz, 2020. "Unravelling the 'race to the bottom' argument: How does FDI affect different types of labour rights?," Munich Papers in Political Economy 05, Munich School of Politics and Public Policy and the School of Management at the Technical University of Munich.

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