Many studies have shown that multinational firms pay more than domestic firms in Third World countries. Economists who criticize
sweatshops have responded that multinational firms’ wage data do not address whether sweatshop jobs are above average because
many of these jobs are with domestic subcontractors. We compare apparel industry wages and the wages of individual firms accused
of being sweatshops to measures of the standard of living in Third World economies. We find that most sweatshop jobs provide
their workers an above average standard of living.
The authors thank Jeffery Hummel, Charles Murray, Larry Pratt, and Edward Stringham for helpful comments on earlier drafts.
Financial support from the American Institute for Economic Research is gratefully acknowledged. The usual disclaimer applies.