There is growing pressure on multinational enterprises to implement 'responsible sourcing' requirements for their suppliers in low- and middle-income countries. These include minimum standards on working conditions, such as wage floors, limits on hours worked, and safety standards. This column studies the impact of responsible sourcing policies in Costa Rica. Theoretically, it argues that responsible sourcing has ambiguous effects on workers. Empirically, it finds that exposed workers benefit, but with adverse knock-on effects on those not directly exposed to responsible sourcing standards.
Alonso Alfaro-Urena, Benjamin Faber, Cecile Gaubert, Isabela Manelici and Jose P Vasquez
20 December 2022
Vox EU
https://cepr.org/voxeu/columns/responsible-sourcing-theory-and-evidence-costa-rica
This work is published under POID and the CEP's Trade programme.
This publication comes under the following CEP theme: Global firms, Inequality: Winners and Losers