Economic Growth and Labor Standards: Evidence from a Dynamic Panel Data Model

The relations between economic growth and international labor standards are explored in a panel of 121 countries from 1974 to 2004. A large literature has empirically tested the neoclassical and endogenous growth models using cross-sectional or panel regressions. Here, the growth model is augmented with labor standards. A dynamic panel data model is used to account for the endogeneity of the determinants of economic growth and labor standards. Two measures of labor standards are used: the rate of work injuries and the rate of strikes and lockouts. The estimation results show that higher levels of labor standards are associated with higher rates of economic growth. Copyright © 2010 Blackwell Publishing Ltd.