Export dependence and institutional change in wage bargaining in Germany

This article explores the adjustment of wage bargaining institutions to international trade in Germany. Embracing IPE as opposed to CPE lenses yields a novel interpretation of change in the institution of wage bargaining. Export dependence of a sector, we argue, has destabilizing effects for industry-wide bargaining by sparking an intra-sectoral cleavage between domestic- and export-oriented enterprises. Specifically, the greater the degree of export dependence of a sector, the greater the degree to which domestic-oriented enterprises within that sector will abandon collective bargaining. We also explain how work-place employee representation through works councils mitigates this effect, such that the presence of works councils helps domestically-oriented firms to hold to collective bargaining agreements in the face of a sector’s deepening exposure to export markets. These claims find empirical support in the history of labor-relations developments in the metal industry and, especially, in extensive analysis of a cross-section of establishments. Our findings attribute major responsibility to the firms driving globalization for undermining collective bargaining institutions, and suggest that economic globalization is a cause of dualization. In all, the article provides fresh ammunition for a version of globalization-induced institutional conversion

South to north investment linkages and decent work in Brazil

Over the last 25 years, the BRICs asserted themselves as drivers of globalization. But what does their new-found prominence mean for working conditions at home? Using a novel sub-national database covering outward investment linkages and working conditions in Brazilian municipalities, this study tests whether a direct investment in Europe leads to the introduction of decent working conditions in Brazil. The empirical results provide strong support for the investing-up effect using a mixture of panel data analysis and text analysis. The results suggest that economic integration with high-standard developed countries can act as a powerful mechanism for labor standard improvements in developing countries

Labor clauses in trade agreements: Hidden protectionism?

We explore the impact of the introduction and design of labor clauses (LCs) in preferential trade agreements (PTAs) on bilateral trade flows over the period 1990–2014. While it is not a priori clear if the inclusion of LCs in PTAs will decrease or increase bilateral trade, we expect the direction of trade to matter, that is, we expect to observe the (negative or positive) impact of LCs in the South-North trade configuration. We also expect, in that configuration, stronger LCs to yield stronger (negative or positive) effects on bilateral trade flows. Using a novel dataset on the content of labor provisions in PTAs, we find in line with our first expectation that while the introduction of LCs has on average no impact on bilateral trade flows, it increases exports of low and middle-income countries with weaker labor standards in North–South trade agreements. Consistent with our second expectation, this positive impact is mostly driven by LCs with institutionalized cooperation provisions. In contrast, LCs with strong enforcement mechanisms do not have a statistically significant impact on exports of developing countries in North–South PTAs. The results are inconsistent with the ideas that LCs are set for protectionist reasons or have protectionist effects, casting doubt on the logic for the reluctance of many developing countries to include LCs in their trade agreements

Labor provisions in trade agreements (LABPTA): introducing a new dataset

Global labor policy through trade has begun to receive growing attention with the inclusion of labor provisions in preferential trade agreements (PTAs). Until recently there has been a shortage of available data that would adequately capture the variation that exists with respect to the scope and stringency of labor provisions, preventing scholars and practitioners from addressing key questions about the design and effects of the trade-labor linkage. This paper introduces a new dataset covering 487 PTAs from 1990 to 2015 coded against 140 distinct items pertaining to six main categories, presenting – to our knowledge – the most rigorous and fine-grained mapping of labor provisions. It also offers the first systematic description of key trends in the design and occurrence of those commitments. Our study shows that labor provisions have not only expanded in terms of their content and participating countries but that labor provisions have, although to a varying degree, also become more stringent over time. The provisions that have across all PTAs increased most steadily are the ones related to the institutional framework set up for the monitoring and implementation of labor commitments, becoming more specialized and more inclusive of third party involvement over time

Protecting labor rights in preferential trade agreements: the role of trade unions, left governments, and skilled labor

This paper investigates variation in the design of labor provisions in preferential trade agreements (PTAs) by focusing on the power of trade unions, the role of government partisanship, and the relative strength of skilled labor. We expect strong trade unions and left-leaning governments to be associated with more, and more far-reaching labor provisions in PTAs. We also expect the strength of skilled workers relative to the strength of unskilled workers to negatively correlate with the depth of labor provisions in PTAs. In addition, the effect of trade unions should be conditional on both the presence of left government and democracy. We test these hypotheses relying on an original dataset of labor provisions included in 483 PTAs signed between 1990 and 2016. This dataset covers 140 different labor provisions that relate to six overarching dimensions. The quantitative analysis finds support for the expectations concerning the influence of trade unions and the role of a country’s skill profile

Globalization and Austerity: Flipping Partisan Effects on Fiscal Policy During (Recent) International Crises

This article investigates the effect of government partisanship on fiscal policy outputs during the three international economic crises of 1981–1984, 1990–1994 and 2008–2013. Encompassing 19–23 advanced democracies, the statistical analysis suggests that partisan effects have increased over time and are characterized, in the two last crises, by a “new asymmetry” whereby left governments pursued more contractionary fiscal policies than non-left governments over the course of the business cycle. Furthermore, it attributes left governments’ endorsement of austere fiscal policies to the constraining effects of financial markets in the context of high/surging debt. This is supported by qualitative analysis of select government responses to the Global Financial Crisis, shedding new light on the new austerity that started in the early 2010s. The ideological mix with political partisanship during hard times surely is confusing to ordinary citizens. The article cautiously points to a neglected yet important international economic origin of our political discontents

The Demand-Side Politics of China’s Global Buying Spree: Individual Attitudes toward Chinese Inward FDI Flows in Comparative Perspective

I investigate public opinion toward Chinese FDI inflows in advanced economies, comparing attitudes toward such investment with attitudes toward American and European FDI inflows. Specifically, I probe whether the threats of technology transfer and of social dumping associated with Chinese FDI resonate among the key target audiences. First, I expect managers to oppose Chinese FDI, while I do not expect similar opposition to American or European FDI. Second, I expect union members to oppose Chinese FDI, and to support European FDI more than they do American and, especially, Chinese FDI. Using original survey data from Switzerland, I find strong support for the expectations regarding managers. Surprisingly, union members do not oppose Chinese FDI, but they support European and to a lesser extent American FDI. The findings point to occupational characteristics and unions as key factors shaping FDI preferences, and suggest that the demand-side politics of Chinese inward FDI is unique

Left-wing austerity during international crises – it’s the financial markets, stupid!

Surprisingly, left governments adopted more conservative fiscal policies than right governments in recent economic crises. Left governments did not choose these policies freely; rather, the financial markets imposed them. Nonetheless, argues Damian Raess, they appear to have dire electoral consequences: left-leaning voters are increasingly voting with their feet

Die Ängste vor chinesischen Investoren werden unterschätzt

Die öffentliche Debatte über eine «Lex China» dreht sich primär um ökonomische Standpunkte. Doch in der Bevölkerung sind auch Ängste vor chinesischen Investoren verbreitet. Diese sollten ernst genommen werden

Are social clauses really just hidden protectionism?

Social clauses in trade deals are sometimes represented as a premise for denial of market access to developing countries. The evidence suggests otherwise