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Journal of Economic Integration 2008 December;23(4) :817-847.
Labor Standards and Economic Integration in the European Union: an Empirical Analysis

Vivek H. Dehejia Yiagadeesen Samy 

Carleton University & CESifo
Carleton University
Copyright ©2008 Journal of Economic Integration

This study is motivated by frequent calls to harmonize labor standards across countries, which result from the fear that economic integration (and the accompanying liberalization of trade flows) will lead to an erosion of working conditions, as countries deliberately try to reduce labor standards in order to maintain competitiveness. We empirically examine the conventional wisdom that labour standards are important determinants of trade performance and whether there has been a "race to the bottom" of standards across EU-15 countries with deeper integration. Our panel data estimates for the period 1980-2001 provide mixed evidence regarding the conventional wisdom and σ-convergence" in labor standards

JEL Classification: F10, F15, F16

Keywords: economic integration | labor standards | comparative advantage | σ-convergence
1. Alam, A. (1992), "Labor Standards and Comparative Advantage", Unpublished Doctoral Dissertation, Columbia University.
2. Arellano, M., and Bond, S. (1991), "Some Tests of Specification for Panel Data: Monte Carlo Evidence and An Application to Employment Equations", Review of Economic Studies, 58(2), 277-297.
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