Diffusion of Labor Standards from Origin to Host Countries: Cross County Evidence from Multinational Companies in Africa

Abstract

This study empirically examines diffusion of labor standards from origin to host countries by investigating whether better labor standards of MNCs’ origin countries are correlated with higher wages of workers in host countries in Africa. MNCs originating from countries with more rights of association and collective bargain and those coming from countries with unions that have strong wage bargaining power are found to pay significantly higher wages to their workers in host countries. These findings highlight that, although domestic policies and institutions may be important determinants of labor-related standards, they do not operate in isolation from external influences coming from origin countries.