Globalization, Wages, and Working Conditions: A Case Study of Cambodian Garment Factories

38 Pages Posted: 19 Jul 2011

See all articles by Raymond Robertson

Raymond Robertson

Macalester College - Department of Economics

Cael Warren

affiliation not provided to SSRN

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

Robertson, Raymond E. and Warren, Cael, Globalization, Wages, and Working Conditions: A Case Study of Cambodian Garment Factories (June 13, 2011). Center for Global Development Working Paper No. 257, Available at SSRN: https://ssrn.com/abstract=1888407 or http://dx.doi.org/10.2139/ssrn.1888407

Raymond E. Robertson (Contact Author)

Macalester College - Department of Economics ( email )

1600 Grand Ave.
Saint Paul, MN 55105
United States

Cael Warren

affiliation not provided to SSRN ( email )

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