NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Effects of Multinational Production on Wages and Working Conditions in Developing Countries

Drusilla K. Brown, Alan V. Deardorff, Robert M. Stern

NBER Working Paper No. 9669
Issued in May 2003
NBER Program(s):   LS   ITI

This paper assesses the evidence regarding the effects of multinational production on wages and working conditions in developing countries. It is motivated by recent controversies concerning whether multinational firms in developing countries exploit workers by paying low wages and subjecting them to substandard conditions. We first address efforts of activist groups, universities, and colleges in the Anti-Sweatshop' Campaign in the United States, the social accountability of multinational firms, and the role of such international institutions as the International Labor Organization and World Trade Organization in dealing with labor standards and trade. We then consider conceptually how foreign direct investment might affect host-country wages. Available theories yield ambiguous predictions, leaving the effects to be examined empirically. We therefore, finally, review empirical evidence on multinational firm wages in developing countries, and the relationship between foreign direct investment and labor rights. This evidence indicates that multinational firms routinely provide higher wages and better working conditions than their local counterparts, and they are typically not attracted preferentially to countries with weak labor standards.

download in pdf format
   (322 K)

email paper

A non-technical summary of this paper is available in the October 2003 NBER digest.  You can sign up to receive the NBER Digest by email.

This paper is available as PDF (322 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w9669

Published: The Effects of Multinational Production on Wages and Working Conditions in Developing Countries, Drusilla K. Brown, Alan Deardorff, Robert Stern. in Challenges to Globalization: Analyzing the Economics, Baldwin and Winters. 2004

Users who downloaded this paper also downloaded these:
Goldberg, Khandelwal, Pavcnik, and Topalova w14416 Imported Intermediate Inputs and Domestic Product Growth: Evidence from India
Brown, Deardorff, and Stern The Effects of Multinational Production on Wages and Working Conditions in Developing Countries
Harrison and Scorse w10492 Moving Up or Moving Out? Anti-Sweatshop Activists and Labor Market Outcomes
Lipsey Home- and Host-Country Effects of Foreign Direct Investment
Lipsey and Sjoholm w8299 Foreign Direct Investment and Wages in Indonesian Manufacturing
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us