Labor Standards and Trade:
A Review of Recent
Empirical Evidence
Over the last two decades, labor standards have become a major issue in
international trade. Three developments mark the rise of this issue: first,
an international consensus was reached on a set of core labor standards
established by the International Labour Organization (ILO); second, bilateral
and regional trade agreements have increasingly included more labor
standards provisions; and third, consumers have increasingly demanded
products produced under better labor conditions. This study evaluates
research on the effects of labor standards commitments on labor conditions;
the influence of trade openness on labor conditions; and the impact
of compliance with labor standards on trade performance.
The research suggests that the ratification of ILO conventions does not
result in improved labor conditions. On the other hand, research appears
to show that agreements, when reinforced by factors such as enforcement
mechanisms, positive incentives, and market forces, may improve compliance
with labor standards, bringing about better labor conditions. Another
line of research suggests that trade openness may improve rather than
degrade labor conditions. Finally, the research finds no clear evidence that