Discussion Paper 3: Apparel Wages Before and After Better Factories Cambodia

19 Jul 2011

Prior to the Cambodian-US Trade Agreement and the Better Factories Cambodia (BFC) program, apparel wage differentials were low. After the trade agreement wage differentials increased dramatically, and, as predicted by trade theory, they follow changes in unit values of apparel. The targets of BFC, working conditions, do not decline following a drop in unit prices of apparel. Instead they increase over this period (at a decreasing rate). These results are consistent with the hypothesis that BFC managed to maintain rising working conditions in the face of falling unit prices. Wages adjusted downward, but compliance increased, suggesting that BFC’s mission was successful.


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