Anti-Sweatshop Activism and the Safety-Employment Tradeoff: Evidence from Bangladesh's Rana Plaza Disaster

Abstract

This study investigates the impact of anti-sweatshop activism on garment industry employment and the number of firms in Bangladesh following the 2013 Rana Plaza factory disaster. The disaster led to activism that created two major brand-enforced factory fire and safety agreements. We employ a synthetic control methodology to investigate the tradeoffs associated with multinational firms’ reaction to the disaster and find that that it led to 33.3 percent fewer garment factories in Bangladesh by 2016 and 28.3 percent fewer people employed in Bangladesh’s garment industry by 2017. Given the importance of the garment industry in Bangladesh’s development in providing a pathway out of extreme property, our finding raises important questions about the efficacy of anti-sweatshop activism in improving worker welfare.

Keywords: Sweatshop, Rana Plaza, Bangladesh, Garment Industry, Synthetic Control

JEL Classification: F16, F23, F63, F66, J28, J81