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Open Economies Review

, Volume 30, Issue 5, pp 975–1003 | Cite as

Are Labour Provisions in Free Trade Agreements Improving Labour Conditions?

  • Inmaculada Martinez-ZarzosoEmail author
  • Hendrik W. Kruse
Research Article
  • 73 Downloads

Abstract

This paper investigates the impact of labour provisions in Free Trade Agreements (FTAs) on labour market conditions in the ratifying countries. Using panel data for up to 96 countries and a time-span from 1995 to 2008, matching techniques and a difference-in-differences approach are applied to identify the effect of FTAs on labour conditions, distinguishing between those with and without labour provisions. The results show that FTAs partially improve labour conditions in the participating countries, and that there are differences in these outcomes between agreements with specific labour provisions and those without. Empirical analysis reveals that labour provisions might be a suitable instrument to ensure labour standards, but also that a ‘global race to the bottom’ may not be prevented through these provisions per-se. The correct targeting of labour provisions is highly likely to play a crucial role in the context of avoiding a race to the bottom.

Keywords

Labour conditions; free trade agreements Trade Race to the bottom Matching 

JEL Classification

F16 F66 

Notes

Acknowledgements

I. Martinez-Zarzoso would like to thank the financial support received from Project ECO2017-83255-C3-3-P (AEI, FEDER, EU) and from project UJI-B2017-33.

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  • Inmaculada Martinez-Zarzoso
    • 1
    • 2
    Email author
  • Hendrik W. Kruse
    • 2
    • 3
  1. 1.Universidad Jaume ICastellónSpain
  2. 2.University of GoettingenGoettingenGermany
  3. 3.LEOUniversity of OrleansOrleansFrance

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