Economic Growth and Labor Standards: Evidence from a Dynamic Panel Data Model

Abstract The relations between economic growth and international labor standards are explored in a panel of 121 countries from 1974 to 2004. A large literature has empirically tested the neoclassical and endogenous growth models using cross‐sectional or panel regressions. Here, the growth model is augmented with labor standards. A dynamic panel data model is used to account for the endogeneity of the determinants of economic growth and labor standards. Two measures of labor standards are used: the rate of work injuries and the rate of strikes and lockouts. The estimation results show that higher levels of labor standards are associated with higher rates of economic growth.