Using a gravity model, we examine whether labor standards are important determinants of bilateral export performance for EU-15 countries over the period 1988-2001. We assess the conventional wisdom that countries with low labor standards and less stringent regulations have performed better in terms of trade performance and use a panel data set in a triple-indexed gravity model to conduct our empirical investigation. Our empirical results indicate that labor standards matter, but that the conventional wisdom does not always hold. The standard variables used in gravity equations conform to theoretical expectations and are highly significant.

Additional Metadata
Keywords international trade, labor standards, gravity equation
JEL Commercial Policy; Protection; Promotion; Trade Negotiations; International Organizations (jel F13), Country and Industry Studies of Trade (jel F14), Economic Integration (jel F15)
Publisher Department of Economics
Series Carleton Economic Papers
Citation
Samy, Y, & Dehejia, V. (2008). Trade and Labor Standards in the European Union: A Gravity Model Approach (No. CEP 08-08). Carleton Economic Papers. Department of Economics.