The Effect of Bilateral Labor Agreements on Trade

The period following the end of World War II is marked by increased international cooperation aimed, among other things, at promoting economic integration. As part of these efforts, national governments adopted policies to remove/reduce barriers to the exchange of goods and services as well as the movement of capital and labor. Although the impact of international trade and investment treaties on trade has been extensively documented, little to no attention has been paid to the potential impact of bilateral labor agreements (BLAs) on commerce flows. This study uses a novel dataset of BLAs within a gravity framework and finds that, over 5 years following signature, BLAs have a positive and significant effect on aggregate exports and exports of differentiated goods (i.e., chemicals and miscellaneous manufactured goods).