Thursday, September 9, 2010

Sweatshops and Economic Development

Should we feel guilty if the clothes we wear were made in so-called sweatshops? Benjamin Powell, assistant professor of Economics at Suffolk University and a Senior Economist with the Beacon Hill Institute, does not think so. In fact, he explains how buying new clothes produced in developing countries in factories known as sweatshops actually helps the world's poor. He and David Skarbek has co-authored an article that shows the benefits of sweatshops to workers in less developed countries. The abstract of the article reads:
Many studies have shown that multinational firms pay more than domestic firms in Third World countries. Economists who criticize sweatshops have responded that multinational firms' wage data do not address whether sweatshop jobs are above average because many of these jobs are with domestic subcontractors. We compare apparel industry wages and the wages on individual firms accused of being sweatshops to measure of the standard of living in Third World economies. We find that most sweatshop jobs provide their workers an above average standard of living.
Powell's work calls to mind this piece from a year and a half ago explaining why garbage dump scavengers in Phnom Penh, Cambodia would be grateful to work in a sweatshop.

1 comment:

  1. I clearly remember a friendly debate over sweatshops in graduate school with an otherwise very intelligent and articulate Leftist who thought for some reason that a multinational could enter a developing country, offer jobs at lower wages than domestic companies, and end up "controlling" the local labor market. Do sweatshop managers have some sort of Jedi powers they can use to put the whammy on laborers to prevent them from seeking higher-paying jobs?