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Paved With Good Intentions: Social Dumping And Raising Labour Standards In Developing Countries

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  • W. Max Corden
  • Neil Vousden

Abstract

This paper uses a two-sector wage differential model to analyse the effects of an increase in labour costs in the export sector of a developing country. The increase is assumed to be a response to humanitarian or protectionist-motivated pressure from developed countries to reduce "social dumping". Some labour would shift into the residual sector of the economy, hence lower wages there, and increase wage inequality. The average wage may rise or fall, depending on elasticity conditions. Monopsony in the labour market, mobility of multinationals in response to lower profits and terms of trade effects are allowed for.

Suggested Citation

  • W. Max Corden & Neil Vousden, 1998. "Paved With Good Intentions: Social Dumping And Raising Labour Standards In Developing Countries," Departmental Working Papers 1998-03, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:1998-03
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    File URL: https://crawford.anu.edu.au/acde/publications/publish/papers/wp1998/9803.htm
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    Cited by:

    1. Alireza Naghavi, 2003. "Asymmetric labor markets and the location of firms: Are multinationals attracted to weak labor standards?," Working Papers 200323, School of Economics, University College Dublin.
    2. NAGHAVI Alireza, 2010. "Asymmetric Labor Markets and the Location of Firms: Are Multinationals Attracted to Loose Labor Standards?," EcoMod2003 330700111, EcoMod.

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