Sensitivity Analysis

The inclusion of seven globalization measures and the consistency of the results with respect to the role of globalization on labour standards is already by itself a test of the robustness of the results to different specifications. In a further step I analyze the effects of globalization on labour standards in developed and developing counties separately. Given the differences in economic development, one might conjecture that globalization has a different effect in developed and developing countries. Tables 3.4.1 through 3.4.4 report the regression results, separately for developed and developing countries [columns (1) and (2), respec-tively]. ⁵² The effect of the EPZ-variable loses significance for the sub-sample of developed countries, but it remains significant for that of developing coun-tries. That is, government commitment to stimulate investment inflows/ exports and its establishing special export zones as a policy instrument to achieve that in developing countries has a significant negative effect on government respect, particularly for FACB. Again this effect of the EPZ-variable survives in all speci-fications. Its significant effect in the full sample can thus have been mainly driven by that for developing countries. The other openness measures are significantly associated with better government respect for labour standards in the different specifications.

52Developing countries are considered those classified by the UN as ”low-income” or ”lower middle income” ones. Developed countries are the rest. (s. World Bank 2003)

Table 3.4.1: Regressions of the Index of Freedom of Association and Collective Bargaining: Developed and Developing Countries.

Dependent variable: THE ILO INDEX OF FACB

EPZ TRADE FDI

27.27 27.5 22.73 28.75 34.15 29.03

LR Chi-square, prob

0.003 0.000 0.001 0.000 0.001 0.000

N of observations 44 80 44 80 41 62

Notes: (1) stands for regression for developed countries, (2) stands for those for developing countries. Each of the three sections corresponds to the regressions on the particular globalization indicator as indicated on the top of the section. *-significance at 10%, ** - significance at 5% , *** - significance at 1%. Numbers in parentheses are standards errors.

Table 3.4.2: Regressions of the Index of Forced Labour: Developed and Develop-ing Countries.

Dependent variable: FLI (INDEX OF FORCED LABOUR)

EPZ TRADE FDI

94.87 60.26 90.48 60.26 83.78 66.67

LR Chi-square, prob

0.002 0.000 0.000 0.000 0.0968 0.000

N of observations 39 78 42 78 37 63

Notes: (1) stands for regression for developed countries, (2) stands for those for developing countries. Each of the three sections corresponds to the regressions on the particular globalization indicator as indicated on the top of the section. *-significance at 10%, ** - significance at 5% , *** - significance at 1%. Numbers in parentheses are standards errors.

Table 3.4.3: Regressions of the Index of Discrimination: Developed and Devel-oping Countries.

Dependent variable: GDI (INDEX OF DISCRIMINATION)

EPZ TRADE FDI

82.93 53.42 82.9 57.73 89.47 49.15

LR Chi-square, prob

0.000 0.000 0.000 0.000 0.000 0.000

N of observations 41 73 41 73 38 59

Notes: (1) stands for regression for developed countries, (2) stands for those for developing countries. Each of the three sections corresponds to the regressions on the particular globalization indicator as indicated on the top of the section. *-significance at 10%, ** - significance at 5% , *** - significance at 1%. Numbers in parentheses are standards errors.

Table 3.4.4: Regressions of Child Labour: Developed and Developing Countries.

Dependent variable: CL (SHARE OF CHILDREN AGED 10-14 WHO WORK)

EPZ TRADE FDI

R squared 0.386 0.605 0.396 0.630 0.474 0.631

Prob of F 0.002 0.000 0.003 0.000 0.001 0.000

N of observations 44 79 44 79 41 65

Notes: (1) stands for regression for developed countries, (2) stands for those for developing countries. Each of the three sections corresponds to the regressions on the particular globalization indicator as indicated on the top of the section. *-significance at 10%, ** - significance at 5% , *** - significance at 1%. Numbers in parentheses are standards errors.

As a further robustness check of the results, I exclude agricultural countries from the sample. The reasoning is that it is meaningful to assess the level of labour standards, and particularly that of FACB, only for countries which are sufficiently industrialized because by definition labour standards stand to protect workers’

rights. I define a non-industrialized country as one with a per capita value added of manufacturing lower than 70 US$⁵³. The estimation results are reproduced in Table 3.4.5 below. They seem to fit in the picture we already have: the presence of export-processing zones is systematically associated with lower respect for the right of FACB, while the other openness measures point to a significant positive relationship between globalization and labour standards. Including in the sample only countries that have a reasonable value added of manufacturing makes the results, in fact, even stronger: virtually all but one openness measures have a significant impact on labour standards.

53This measure is a better indicator of industrialization in this case than the share of value added of manufacturing in GDP because it is not affected by the decrease of the relative share of manufacturing in GDP in favour of the services sector that took place in the last 10-15 years in most developed countries. An even better measure perhaps is the share of employment in manufacturing or in industry; this variable however has lots of missing values, and for this reason has not been used. The figure 70 US$ has been chosen so that it is around 10% of the sample mean of the variable. The countries that have thus been excluded from the initial sample are listed in the Appendix. The listed countries are in their major part least developed countries as classified by the UN.

Table 3.4.5: Regressions of the Index of Freedom of Association and Collective Bargaining: Industrialized Countries.

Dependent variable: FACB (FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAIN-ING

EPZ TRADE EXP MER MAN FDI

(1) (2) (3) (4) (5) (6)

24.4 23.17 22 21.52 25.6 29

LR Chi-square, prob

0.000 0.000 0.000 0.000 0.000 0.000

N of observations 82 82 82 79 82 76

Notes: Each column corresponds to a regression on the particular globalization indicator as indicated on the top of the column. *-significance at 10%, ** - significance at 5%, *** - significance at 1%. Numbers in parentheses are standards errors.