Chris Blattman

Do anti-sweatshop campaigns reduce employment?

No, say Ann Harrison and Jason Scorse in a new AER paper (ungated):

We find that anti-sweatshop campaigns led to large real wages increases for targeted enterprises. We also examine whether higher wages led these firms to cut employment or relocate elsewhere.

The results suggest that there were some costs in terms of reduced investment, falling profits, and increased probability of closure for smaller plants, but we fail to find significant effects on employment.

The strongest argument against a minimum wage is the consequent fall in employment. But what if that fall isn’t consequent? See Card and Krueger for the rich country research.

2 Responses

  1. the last page of their text says something much more intuitive than the abstract, that “the minimum wage increases led to employment losses for production workers across all sectors in manufacturing.”

  2. Card and Krueger is no longer the state of the art and it’s always been an outlier, results-wise.

    In any case, what we care about is aggregate employment, rather than employment in some industry. I would also worry about compositional changes.

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