[Excerpt] Our understanding of the impact of core labor rights, specifically the rights to freedom of association and collective bargaining, on labor market outcomes in developing countries is limited. Due to a lack of empirical evidence, the promotion of such rights remains controversial. Proponents argue that such rights prevent a ‘race to the bottom’ in the face of global integration, growing competitive pressures, and limited international cooperation in setting standards. Critics counter that such rights raise labor costs excessively and limit employment growth. Although both sides adopt strong positions, there is a good deal of uncertainty about the actual impact of such rights on wages and employment.
This uncertainty arises, in large part, because of the difficulties in measuring labor rights at the country level and is compounded by limitations on comparable wage and employment data for many developing economies. In this report, we use existing data and indicators to examine the question: how do improvements in freedom of association and collective bargaining rights, in law and in practice, affect key labor market outcomes, such as real wages and employment? We are particularly interested in the impact of the rights to freedom of association and collective bargaining in low- and middle-income countries. However, by way of comparison, we also examine the impact of identical measurements of these rights in high-income countries.