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Michael Huberman, Christopher M. Meissner
NBER Working Paper No. 15374
Issued in September 2009
NBER Program(s): DAE
---- Abstract -----
This paper challenges the received view that pins the adoption of labor regulation before 1914 on domestic forces, particularly the rises in income and voter turnout. Building on standard state-year event history analysis, we find that trade was also a main pathway of diffusion. Countries that traded with each other were more likely to establish a level playing field. The transmission mechanism was strongest in north-west Europe because intra-industry trade was significant in the region. When states failed to emulate the superior labor regulations of their most important trading partners, they left themselves vulnerable to embargos and sanctions on their exports. Threats of market loss were not credible in the New World because it exported mainly primary products and prices were fixed by world demand and supply. Domestic forces trumped international pressures to converge, with the result that labor regulation developed more slowly in regions of new settlement than in the European core.
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