The Impacts Of Export On Firms' Labor Standards

Although the international economic environment is undergoing massive change that frequent trade frictions are posing threats to the stability and sustainability of China's export growth and dragging down the global economy,export remains a key driver of China's economic development.On the other hand,the 19^th National Congress of the Communist Party of China(CPC)proposed“ensuring and improving living standards through development”and“people's wellbeing being the fundamental goal of development”,and recently the 5^th plenary session of 19^th CPC Central Committee endorsed a people-centered approach as the guideline for the 14^th Five-Year Plan.A primary task is therefore to provide decent work for all,and the question of how it can be achieved in such a changing environment concerns not only policy makers but also academics.Drawing on Annual Survey of Industrial Firms,customs data,city-level minimum wage data,mandated rates for social insurance and CEPII-BACI data,this thesis examines the impacts of export on firms'labor standards.Main findings are established as follows:(1)The thesis first clarifies the meanings of terminologies such as international labor standards.Provided available datasets,firms'compliance with minimum wage legislation,firms'social security contributions and development of firm-level labor unions are selected as the proxies for labor standards.Institutional backgrounds of and stylized facts on each are shown.Specifically,in reference to minimum wage legislation,city-level mandated rates rose constantly,especially after 2004 when Minimum Wage Regulations was issued;differences in mandated rates among cites increased over time;cities'adjustments of mandated rates were featured with a 2-year periodic routine;firms'compliance with the legislation also improved over time;firms that are in east region,state-owned and foreign-invested,or large are more compliant.In reference to social security obligations,mandated rates(for pension and medical insurances)barely changed within cities during the sample period;however there are significant differences among cities in mandated rates,especially for pension insurance;levels of mandated rates are not necessarily related to economic development;most firms contribute far less than their local mandated levels;firms that are state-owned and foreign-invested,in east and west region,or large contribute relatively more.In reference to development of labor union,firms that are state-owned,large or composed of more educated workers are more likely unionized;the proportion of unionized firms is tremendously different across industries;unionized firms outperform non-unionized ones on almost all aspects.(2)Next,the thesis investigates the impacts of export on firms'compliance with minimum wage legislation.Results show that export improves the chance of firms complying with minimum wage legislation and this conclusion is robust to considering potential endogeneity and a series of other tests such as re-calculating average wages for unskilled workers and adjusting mandated minimum wages.Further multinomial logit regressions find no evidence that a series of pernicious exercises are disguised by exporting firms'superior compliance merely to avoid the risk of violating minimum wage laws,suggesting that export results in material gains to workers.Our mediation analysis indicates that export wage premium resulting from learning-by-exporting is an important channel through which export affects minimum wage compliance.Additionally,based on the model of heterogeneous firms,results that export to countries where the notion of corporate social responsibility(CSR)is more prevalent and from firms in textile,footwear and apparel industries that are more exposed to human rights activism leads to better minimum wage compliance prove that supply chain pressure is another key underlying mechanism.(3)The thesis then studies the influences of export on firms'social security contributions.Results show that firms'actual contribution rates increase in export intensity.Instrumental variable estimation confirms the causality running from export to social security contributions,and other robustness checks substantiate the validity of the conclusion.Three mechanisms,namely learning-by-exporting effects,migrant-workers effects and supply chain pressure,are proposed and then tested.Results of mediation analyses demonstrate that learning-by-exporting effects that firm export raises social security contribution via heightened total factor productivity is a key channel,whereas no ample evidence is found of migrant-workers effects.Again,based on the model of heterogeneous firms,export from firms that engage in pure assembly,that belong to textile,footwear and apparel industries,and that are located in the Pearl River Delta and Yangtze River Delta areas is more constructive,which is in line with theoretical expectations and marks the existence of supply chain pressure.Potential disturbances to this conclusion caused by the other two mechanisms are discussed and ruled out.Moreover,split-sample analyses find that firms that are non-state-owned,small or with lower average wages are more prone to supply chain pressure,lending further support to the mechanism.(4)The thesis continues to explore the effects of export through pure assembly on development of firm-level labor unions.First,results show that,driven by supply chain pressure,pure assemblers are more likely to be unionized,which symbolizes a firm's labor standards.Potential endogeneity caused by omitted variables or reverse causality do not jeopardize this finding.Robustness checks that redefine firms'(long-term)export mode,that drop stated-owned and reformed firm samples,that employ newly-established firm samples and that add county-industry interactive fixed effects obtain similar results.Second,supply chain pressure exerts direct and indirect effects on other labor standards simultaneously,both positive.The direct effects refer to that pure assemblers adjust labor standards in response to downstream importers'requirements.By contrast,the indirect effects are more material and results from a more organized and effective labor union,which is in turn a result of,for example,democratic union elections and training union committee members under downstream importers'CSR initiatives.Taking firms'social security contributions as an example,the indirect effects are reflected in both enhanced prospect of firms participating in the social security system and increased actual contribution rates,whereas the direct effects are manifest in the former only.Third,neither directly nor indirectly can supply chain pressure raise workers average wages,suggesting supply chain pressure is yet futile on core issues.The higher labor standards observed in pure assemblers are in nature a means by downstream importers to cater for consumers'moral conscience.Provided abovementioned findings,the thesis proposes that firm-level labor union reform can be advanced in a downstream-to-upstream way,however the effectiveness depends on Chinese consumers'CSR education in the long run.