Do sweatshops lift workers out of poverty? This experiment might surprise you.

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Expecting to prove the experts right, we went to Ethiopia and — working with the Innovations for Poverty Action and the Ethiopian Development Research Institute — performed the first randomized trial of industrial employment on workers. Little did we anticipate that everything we believed would turn out to be wrong.

Stefan Dercon and I have an op-ed in today’s New York Times.

The best tweet so far:

7 thoughts on “Do sweatshops lift workers out of poverty? This experiment might surprise you.

  1. Wish more people could be as honest about the conflict of wishing there was another way instead of development but accepting that historically it has been the only way. The value chains in Africa are incredibly inefficient and so factories in Africa get the worst work because that is the only way to compete with cheap Asian imports. Time will tell if Africa can industrialize like China and grow or industrialize like Bangladesh and stagnate. I’m optimist but we should all be skeptical. Great research and wish more looked into this given what history tells us.

  2. Well. Mine may not be a politically correct take, and Haiti is NOT Ethiopia – but based on my 16 years’ of summers and post-Earthquake hands-on living with textile factory workers AND agricultural workers (e.g. “peasants”) in a remote mountain zone 25 mi. (but light-years) away from Port au Prince — the feeling was that a job in a textile factory was like getting an “in” as an extra in Hollywood! Haiti has very few salaried jobs, jobs in “formal sector,” and while, yes, “Shine” – his nickname – who earned his living shining shoes, did brag that he made much more than a factory worker, the factory jobs DO have maternity benefits, a modest amount of health insurance, as well as steady work, a reliable pay check AND (from what I observed) decent working conditions: chairs, potable water, toilets with running water – AND TOILET PAPER, SOAP! — For a woman who wants to have a child/children, a job in a textile factory is not a bad option. FEW are the country girls, however, who have the necessary skills (or connections) to get such jobs. Getting a job in a factory depends on WHO you know, not what you know (somewhat like getting into Harvard or Stanford!!). If you can get a job, it is quite a step up from schlepping water in the city or emptying the slop jar, or being an over-used (sic. “abused”) domestic or “restavek” (sic “au pair”). And at least SOME factory managers/owners are open to improving conditions…workers shared their mixed feelings — and Haitian factory workers (surprise surprise) are no different from the rest us: who among us does not want MORE PAY?! Workers made a point not often heard in the USA, i.e., that a business has to make a profit if it is to remain in business…And for the factory owners, it’s still a challenge to persuade more of them to do with a little less private profit and pay workers more…Still, young workers (after the EQ) were happy to be able to pay their own way, not lean on the parents/older siblings, be able to pay for lunch, transportation and some other expenses. These young urban workers invariably had quite a bit of education – completion of (private) high school and more. In the capital, Port au Prince, there were (are?) few other options. In the rural zone, people said they’d be thrilled if there were factory jobs, textile jobs. More than One older man had been employed in such a factory years before, and lamented that he could no longer live (scrounge) in the city, he had no place to live there and could not keep his job. Now, profit sharing might be an idea to pant in the minds of managers and owners…? But in Haiti, an opportunity to EARN and to EAT is no small thing. In contrast perhaps to Ethiopia and Bangladesh, Haiti seems to be in no small part a country of 10 million hungry people…It produces very little aside from mangoes – and people – and exporting people has been an important economic strategy for decades. Yes, INVEST in Haiti, take a chance, take a risk…tap into the skills of a (still) largely illiterate, barefoot peasantry…More at http://www.haitinextdoor.com and http://www.ifpigscouldflyhaiti.org and on FB Haiti Next Door.

  3. Hilarious! The Times finally publishes the truth about sweatshop exploitation of workers – and it ends with an endorsement of sweatshop labor as the only way to end “extreme” global poverty and recommends “encouraging companies to adopt modern management strategies and worker protections”. The two academics who authored this unintentionally funny report just don’t get it: transnationals open sweatshops BECAUSE they don’t want to “adopt modern management strategies and worker protections” or pay decent wages. A global minimum wage and workplace safety standards would be just as easy to initiate as the already-in-existence global regulations that govern other areas of commerce, but the wealthy people who control the west’s governments enjoy the profits they achieve by exploiting workers.

  4. Hi Chris B – Interesting and eye opening – clearly this needs to be replicated to prove that truly all factories in developing world are bad, as you mention in the body of the text…but nice title to get us to read!

    Couple of questions:
    – for Group 2 – why did you not make it a true control group and do absolutely nothing (except interview them) instead of giving them cash and training? Or create 3 groups – 2 with interventions and 1 with nothing?

    – You make the conclusion but did not share any summary data. How many people (%) dropped out of the jobs (you mention ‘most’)? How long did you follow them? What was the income differential of the two groups over time? Whose kids of the two groups stayed in school more? How much money was sent home each week? Who got sick more often? Even if preliminary – that might help your argument if you could at least provide the summary results.

    Thanks – Chris L

  5. I just returned from Hawassa, where a new industrial park is being built on the outskirts of the city. Everyone I talked to was very positive that factory jobs and industrialization would be a huge help to the local economy and the local people. This is a super interesting report. Thanks for sharing!

  6. I told my brother about this and he concluded, “So pointy-haired bosses are ruining the sweatshops?”