Global Apparel Production and Sweatshop Labor: Can Raising Retail Prices Finance Living Wages?

Abstract:     
This paper provides some empirical evidence on issues raised by the global anti-sweatshop movement. We first consider the relationship between wage and employment growth, finding no consistent trade-off between them. We then measure the share of labor costs in the production of garments in the United States and Mexico. We find that the retail price increases necessary to absorb the costs of substantially raising wages are small, well within the range of price increases that polls suggest U.S. consumers are willing to pay. We close by considering some implications of these results.

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