Core labour standards and foreign direct investment

This article applies new country-level measures of labour standards - constructed from coding textual information and emphasizing de facto considerations - in a cross-country econometric analysis of foreign direct investment inflows in the 1990s. The fundamental labour standards considered concern freedom of association and collective bargaining, child labour, and gender discrimination and inequality in the workplace. Consistent with prior studies, no solid evidence is found in support of what has been referred to as the "conventional wisdom", namely that foreign investors favour countries with lower labour standards; indeed all evidence of statistical significance points in the opposite direction.