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This article investigates the nature of the linkages between trade and labor rights in developing countries. Specifically, we hypothesize that a “California effect” serves to transmit superior labor standards from importing to exporting countries, in a manner similar to the transmission of environmental standards. We maintain that, all else being equal, the labor standards of a given country are influenced not by its overall level of trade openness, but by the labor standards of its trading partners. We evaluate our hypothesis using a panel of 90 developing countries over the period 1986–2002, and we separately examine the extent to which the labor laws and the actual labor practices of the countries are influenced by those of their export destinations. We find that strong legal protections of collective labor rights in a country's export destinations are associated with more stringent labor laws in the exporting country. This California effect finding is, however, weaker in the context of labor rights practices, highlighting the importance of distinguishing between formal legislation and actual implementation of labor rights.
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... government adopting a similar policy. Voluminous literature on policy emulation 2 has observed that "peer" countries (measured by geographic proximity, ideological similarity, shared colonial history and trade dependence) are more likely to adopt similar policies in issue areas such as privatization reforms, electoral systems and political regime choices, and labor and environmental rights (Brooks 2005;Rogowski 1987;Simmons and Elkins 2004;Simmons et al. 2006;Lee and Strang 2006;Greenhill, Mosley and Prakash 2009). However, these studies either demonstrate such emulation exists among policy-making elites or they neglect domestic politics altogether by modeling state responses to common shocks, such as globalization, recession, import shock from China and technological advancement (Autor et al. 2013;Colatone and Stanig 2018;Mansfield and Mutz 2013). ...
... We chose trade policy as our issue because observational studies have identified trade between countries as one of the key channels in which policy emulation occurs (Greenhill, Mosley and Prakash 2009;Lee and Strang 2006). We devised a novel survey instrument to measure citizens' perceived "peer-ness" across a range of countries before the treatments and randomly assigned respondents to read fact-based news articles about their neighboring countries (South Korea and China) signing trade agreements. ...
... States, as well as subnational units, compete against each other economically, which can lead to a race to the bottom of e.g. the tax level (Shipan & Volden, 2008;Wasserfallen, 2014). On the other hand, when it comes to the diffusion of standards, influential actors' behavior can lead to a race to the top (California effect, see Greenhill et al., 2009). ...
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