Economic liberalisation, market institutions and labour rights

What effect do pro-market economic policies have on labour rights? Despite significant debate in policy and academic circles about the consequences of economic liberalisation, little is known about the labour rights effects of pro-market policies. Extant literature has focused only on the possible outcomes of market-liberalising policies, such as trade and investment flows, rather than directly assessing market-friendly policies and institutions. Moreover, this line of research has found mixed results on how these outcomes influence labour conditions. To provide a comprehensive assessment of this linkage, this article combines data on five distinct policy areas associated with economic liberalisation with data on labour rights for the period 1981-2012. The results indicate that pro-market policies - except the ones involving rule of law and secure property rights - undermine labour rights. Thus while there are some positive economic and political outcomes associated with market-supporting policies, economic liberalisation comes at the cost of respect for labour rights.