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Social Dumping in the Transformation Process?

Hans-Werner Sinn

CESifo (Center for Economic Studies and Ifo Institute); National Bureau of Economic Research (NBER); Ludwig-Maximilians-Universität München

June 2001

CESifo Working Paper Series No. 508

Business representatives and union leaders in highly industrialised countries often accuse the governments of less-developed countries of practising social dumping in the sense of deliberately neglecting work-place safety legislation, co-determination rights and other fringe benefits which define the quality of workplaces. This paper refutes this view by modelling the transition path of a less-developed small open economy that faces transactions costs when trading capital and labour with the rest of the world. It shows that competitive markets and competitive governments choose Pareto efficient transition strategies which are characterised by a sluggish development of market wages and government-imposed social standards.

Number of Pages in PDF File: 36

JEL Classification: J30, F15, H50

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Date posted: August 8, 2001  

Suggested Citation

Sinn, Hans-Werner, Social Dumping in the Transformation Process? (June 2001). CESifo Working Paper Series No. 508. Available at SSRN: http://ssrn.com/abstract=277285

Contact Information

Hans-Werner Sinn (Contact Author)
CESifo (Center for Economic Studies and Ifo Institute) ( email )
Poschinger Str. 5
Munich, DE-81679
+49 89 9224 1276 (Phone)
+49 89 9224 1409 (Fax)
HOME PAGE: http://www.cesifo.de
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Ludwig-Maximilians-Universität München
Geschwister-Scholl-Platz 1
Munich, 80539
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