Globalization, Wages, and Working Conditions: A Case Study of Cambodian Garment Factories
38 Pages Posted: 19 Jul 2011
Date Written: June 13, 2011
Abstract
We use a comprehensive data set of working conditions and wage compliance in Cambodia’s exporting garment factories to explore (1) the impact of foreign ownership on wages and working conditions, (2) whether the relationship between wages and working conditions within these exporting factories more closely resembles efficiency wage or compensating differential theory, and (3) whether the wage-working conditions relationship differs between domestically owned and foreign-owned firms. We find that foreign ownership increases compliance on both wages and working conditions, contradicting the contention that higher wages in foreign-owned firms compensate workers for worse working conditions. In addition, we find a robust positive relationship between wages and working conditions in the sample as a whole, suggesting that efficiency wages or a similar theory more accurately explains the behavior of these exporting firms than compensating differentials.
Keywords: better factories Cambodia, compensating differentials, Cambodia, apparel
JEL Classification: O14, O15, O19
Suggested Citation: Suggested Citation
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