Deep Integration in Trade Agreements: Labor Clauses, Tariffs, and Trade Flows

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Child Labor Standards in Regional Trade Agreements: Theory and Evidence

“…Denote the domestic price of X as p. Each good j is produced with low-skilled labor L j , high-skilled labor H j , and a specific factor K j , by a constant-returns-to- 2022) study how labor provisions in RTAs affect bilateral trade flows and find that on average these clauses do not have a statistically significant impact. Robertson (2021) finds that specific labor clauses in trade agreements, such as child labor standards, are associated with an increase in trade, most likely as they boost demand from reputation-conscious buyers (Maskus, 1997). 4 The model presented here is static, close to the spirit of Basu and Van (1998) and the theory model of Edmonds and Pavcnik (2005).…”