The effects of international scrutiny on manufacturing workers: Evidence from the Rana Plaza collapse in Bangladesh

Laurent Bossavie, Yoonyoung Cho and Rachel Heath

Journal of Development Economics, 2023, vol. 163, issue C

Abstract: After the tragic factory collapse of Rana Plaza in 2013, both the direct reforms and indirect responses of retailers have plausibly affected workers in the Ready Made Garment (RMG) sector in Bangladesh. These responses included a minimum wage increase, high profile but voluntary audits, and an increased reluctance to subcontract to smaller factories. This paper estimates the net impact of these responses using six rounds of the Labor Force Survey and a triple difference approach that compares garment workers to non-garment workers, in districts containing the vast majority of export garment factories versus other districts, pre versus post Rana Plaza. As intended by the reforms, we find that increased international scrutiny improved working conditions by 0.80 standard deviations. In contrast with what the theory of compensating differentials would suggest, we do not find that workers’ wages were negatively impacted: instead, the post-Rana Plaza responses increased wages by about 10%.

Keywords: Garment sector; Working conditions; Gender; Minimum wage (search for similar items in EconPapers)
JEL-codes: F16 J16 J31 J32 J81 O12 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: The Effects of International Scrutiny on Manufacturing Workers: Evidence from the Rana Plaza Collapse in Bangladesh (2020)
Working Paper: The Effects of International Scrutiny on Manufacturing Workers: Evidence from the Rana Plaza Collapse in Bangladesh (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:163:y:2023:i:c:s0304387823000627

DOI: 10.1016/j.jdeveco.2023.103107

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