Social Dumping in the Transformation Process?

36 Pages Posted: 8 Aug 2001  

Hans-Werner Sinn

CESifo (Center for Economic Studies and Ifo Institute); National Bureau of Economic Research (NBER); Ludwig Maximilian University of Munich

Multiple version iconThere are 2 versions of this paper

Date Written: June 2001

Abstract

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.

JEL Classification: J30, F15, H50

Suggested Citation

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

Hans-Werner Sinn (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute) ( email )

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National Bureau of Economic Research (NBER)

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Ludwig Maximilian University of Munich

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