Social Dumping: Theoretical and Empirical Aspects

The Dissertation "Social Dumping: Theoretical and Empirical Aspects" consists in three logical parts, each of them analyzing the nexus labour standards - labour market outcomes - globalization. The first part, Chapter 2, is a theoretical analysis of the effects of globalization on the equilibrium labour market policy, employment and wages. The policy instrument considered is a minimum wage set by the government and influenced by two lobby groups. Globalization is modelled as an increase in capital mobility. The theoretical model developed in this Chapter allows analyzing how globalization affects the political feasibility of the labour standards, i.e. whether its level is reduced or increased as the economy becomes more open. Chapters 3 and 4 are empirical. Chapter 3 looks at the determinants of four different kinds of labour standards. A major set of explanatory variables consists in different measures of openness. In addition, two variables portraying the political process and the politicians' preferences are employed. The first measure is the Political Rights Index of Freedom House measuring the level of democracy. The second one is a dummy variable indexing whether the country has established special export processing zones. This variable is interpreted as indicating particular commitment of the governing elite to promoting exports. Chapter 4 looks at an imporatant implicit assumption of the Social Dumping Argument. Namely, whether multinational enterprises are really attracted to countries where labour standards are relatively low, or put differently, whether low labour standards really provide competitive advantages in attracting foreign direct investment and stimulating exports.