Export Performance,Labor Standards and Institutions: Evidence from a Dynamic Panel Data Model

I investigate the role of labor standards in international trade. While the literature has used many different measures of labor standards, I use two: the rate of work injuries and the rate of strikes and lockouts — allowing me to construct both measures for 112 countries from 1980 until 2004. This allows dynamic panel data methods to be used in estimation. Three measures of the quality of institutions are also used for the same period: the number of years the chief executive is in office, the concentration of a country’s legislature measured by the Herfindahl-Hirschman Index, and whether the legislature is controlled by a party representing a special interest. The results show that countries with better labor standards and institutions do trade more — their exports to GDP ratio is higher.