In the empirical literature on labor standards and economic performance, the adoption of international labor standards is measured by the ratification of International Labor Organization (ILO) conventions and is treated as an exogenous variable that explains labor costs, growth, exports, or inward foreign direct investment. For example, OECD attempts to relate aggregate and labor intensive exports to the ratification of ILO conventions.1 No relationship is found, which is interpreted by some as suggesting that there are no economic costs to the adoption of labor standards. But Mah, who also investigates the role of labor standards on export performance, finds a negative association between the ratification of certain "core" ILO conventions and performance.2 Rodrik tries to explain manufacturing labor costs and finds that the number of conventions ratified is statistically significant.3 Palley finds a positive association between economic growth and the ratification of the Freedom of Association Convention.4 But Rama argues that the number of ILO conventions ratified is not significant as a determinant of growth performance in Latin America.5
Throughout this empirical literature, therefore, the ratification of ILO conventions is assumed to provide information on labor standards adopted and [End Page 113] implemented in a country. This paper's object is to investigate the determinants of ratification directly and, indirectly, the determinants of labor standards. It presents an empirical analysis of the time patterns and determinants of ratification. Despite the relative lack of emphasis on enforcement and punishments associated with these conventions, we find evidence suggesting a process of self-selection and matching in which the probability of ratification depends on country characteristics. For example, we find that peer effects are in play. For some conventions the probability of ratification depends on how many other countries in a peer group have already ratified that convention.
Click for larger view
View full resolution
The following section of this paper introduces the ILO core conventions that are the focus of interest, presents basic data on their ratification, and begins the discussion on basic time patterns in ratification. Next, the paper develops an analytical framework for the empirical analysis by considering the ratification decision and its determinants. This is followed by econometric results and a conclusion.
ILO Core Conventions: Who Ratifies and When
ILO conventions are international treaties, subject to ratification by member states. There are now more than 180 conventions on a wide array of subjects. But the ILO itself has established a set of core labor standards. These standards are laid out in the ILO Declaration on Fundamental Principles and Rights at Work under four main headings, as shown in table 1.6 These constitute the eight fundamental conventions of the ILO. [End Page 114]
However, the decision to ratify any of these conventions remains the right of each member nation, and it reflects willingness on the part of the ratifying country to enact legislation, and put in place mechanisms that facilitate implementation in practice. On the part of the ILO, three types of mechanisms are in place to ensure compliance. First, systems of supervision are in place to improve transparency and to oversee compliance.7 A second component of ILO activities that facilitates improvements of labor standards takes the form of technical assistance and financial support, especially for the poorest countries. Finally, in cases of violation where recommendations are not responded to, Article 33 of the ILO constitution provides that the ILO Governing Body may recommend "action as it may deem wise and expedient to secure compliance therewith" against the violating country.
These mechanisms outline the extent to which there may be explicit costs and benefits associated with ratifying ILO conventions. But what is repeatedly stressed in policy and popular writings is that sanctions against noncomplying members have very rarely been invoked. And it is generally agreed that the ILO lacks "teeth" to enforce implementation of conventions that have been ratified.8 Allegations have also been raised regarding the ILO supervisory system.9 In particular, as measures against violating countries are typically based either on complaints by...