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Global value chains and labour standards: The race-to-the-bottom problem

Hyejoon Im & John McLaren

The Economic Journal2026https://doi.org/10.1093/ej/ueag030article
AJG 4ABDC A*
Weight
0.50

Abstract

We ask how globalization affects governments’ incentives to set labour standards for workers. In a stylized global value chain model, globalization by reducing trade costs or adding countries with complementary skills improves working conditions, whether set by employers or governments. Addition of countries with similar skills has the opposite effect. Equilibrium labour standards are actually stricter than optimal because each country passes some of the costs of its improved labour standards onto other countries (consumers of the final good, for example). Nash equilibrium tariffs make regulation of working conditions redundant, but multilateral reduction of tariffs brings them back into force.

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https://doi.org/https://doi.org/10.1093/ej/ueag030

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@article{hyejoon2026,
  title        = {{Global value chains and labour standards: The race-to-the-bottom problem}},
  author       = {Hyejoon Im & John McLaren},
  journal      = {The Economic Journal},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1093/ej/ueag030},
}

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Global value chains and labour standards: The race-to-the-bottom problem

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.