Dollars and Jens
Friday, January 16, 2009
A local paper takes note of all the poor people who wish they could be exploited by sweatshops.

Labor standards are a luxury rich countries can afford, and there are arguably cultural benefits to setting a minimum for them at some healthy remove from the affordable mean, but there's no sensible morality that would, fully informed, support their being imposed on countries where they aren't affordable.

As for the effect on trade, attempting to export our labor standards will weaken our comparative advantage in capital- and skill-intensive products. In your classic Hecksher-Olin model, this will increase the relative returns to unskilled labor, but at a more than compensating cost to capital and skilled labor; domestic job training programs would likely be better for all large classes of people than would trying to export our labor standards.


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