Do trade agreements with labor provisions matter for emerging and developing economies’ exports?

What are the effects of trade agreements with labor provisions on trade? This question has increasingly gained traction due to the growing importance of trade agreements and the proliferation of specific clauses related to labor rights and conditions included in such agreements. So far, the literature has focused on analyzing these effects at an aggregate level, with mixed results. In this paper, we capture heterogeneous effects of trade agreements with labour provisions separating exports by the factor intensity of their production process (labor-intensive vs. non-labor-intensive). Embedding institutional comparative advantage within a gravity framework, we show that, overall, the effects of trade agreements with labor provisions are no different from those of the universe of trade agreements. However, by affecting their comparative advantage, we find that agreements including labor provisions tend to reduce labor-intensive exports from emerging and developing to advanced economies (“South-to-North” exports).