The Impact of the Enhancement of Collective Labor Standards on Industrial Transfers

Under what conditions will enhancement in collective labor rights facilitate in- dustrial transfers from China to Vietnam after the Sino-US trade war? Focusing on Vietnam, a country that benefits from the trade diversion effect and industrial transfers after the Sino-US trade war, this paper attempts to analyze the relationship between in- dustrial transfers and labor rights and movement by using product-level and firm-level data. Specifically, I argue that labor standards can be an instrument of institutional comparative advantage to facilitate industrial transfers. Through reputational and strategic mechanisms, products with higher labor standards or less visible in terms of labor practices, such as capital-intensive products and upstream products, are more likely to transfer from China to Vietnam after the trade war. I also argue that firms with higher collective labor standards and firms invested by democratic countries are more likely to accept industrial transfers.