Economic Globalization and Convergence in Labor Market Regulation: An Empirical Assessment

Abstract

A major question for the comparative analysis of industrial rela \rtions and labor market institutions has been the extent to which labor \rlaws in different countries have converged or diverged over time. A \rsecond question is whether any convergence between labor law systems \ris associated with economic globalization. Using a new measure of the "protective strength" of a country's labor market regulation (the Longi \rtudinal Labor Regulation Index), this study compares the evolution of \rlabor laws in six countries (Australia, France, Germany, India, the \rUnited Kingdom and the United States) for the period 1970 to 2005. \rWe assess whether there has been a convergence in the protective \rstrength of labor market regulation between these countries or ongoing \rdivergences between them. In particular, we test whether there is evi \rdence of "formal" or "functional" convergence, "weak" or "strong" \rconvergence, "simple" or "bipolar" convergence, and whether conver \rgence is associated with globalization and economic integration \rbetween the countries included in our study. Our analyses show that \rover the period from 1970 to the mid-1980s the protective strength of \rlabor laws actually diverged, but began to converge thereafter. Al \rthough we find evidence of both formal and functional convergence \rduring this later period, this propensity has been weak, and tended \rtoward a pattern of "bipolar convergence." At the same time, the data do not indicate that any of these processes of convergence were associ \rated with an "Americanization" of labor law, or a race to the bottom. \r