| This thesis contains three essays and a short introductory chapter. The main theme of the thesis is the interaction of international trade and labor standards, which has been at the forefront of recent trade negotiations, both at the regional and multilateral level. Even though the essays in this thesis share a common theme, they can be read independently without impeding the reader's understanding of the issues discussed in each.; The first essay theoretically considers the impact of labor standards on comparative advantage through their effects on the terms of trade. I use a standard Heckscher-Ohlin trade model and analyze the effects of incorporating a standard that takes resources away from the tradeable sectors. I find that movement in the terms of trade due to the imposition of a standard depends on whether the standard withdraws resources from the import or the export sector, and also on the capital-labor ratios of the tradeable goods. These results imply that there exist grounds for countries to set higher than optimal levels of standards in order to obtain terms of trade gains. The second essay makes use of cross sectional data for a sample of more than seventy (developed and developing) countries to analyze the issue of trade and labor standards. It seeks to answer two questions, first, whether the imposition of labor standards affects the export performance of countries, and second, whether labor standards affect foreign direct investment (FDI) flows.; The third essay, unlike the general approach in the literature which is based on cross-sectional analysis, uses a time series approach based on the structural change literature to analyze and compare the effects of different measures of labor standards on the behavior of exports for Canada and the United States. It also provides an analysis of the issue of convergence of labor standards between the two countries within the context of the North-American Free Trade Agreement. Overall, the empirical results from the second and third essays suggest that caution should be exercised before drawing broad conclusions regarding the magnitude and direction of the effects of labor standards on both export performance and FDI flows, which can have very different policy implications. |
