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Working Right with Worker Rights Corruption and Worker Right Violations, a Quantitative Analysis

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Working Right with Worker Rights Corruption and Worker Right Violations, a Quantitative Analysis Working right with worker rights Corruption and worker right violations, a quantitative analysis Alex Jankell DEPARTMENT OF GOVERNMENT Uppsala University Bachelor Thesis C Supervisor: Per Ola Öberg Semster and year: Spring 2021 Wordcount: 12469 (Excluding Appendix) Abstract The rights that govern a person's workplace relationship, worker rights, are an important part of everydaylife for many people on earth. As these rights are violated, the safety of the workers livelihood is threatenedand as such the lack of security undermines the socialcontract in society. The social contract approach to corruption, as championed by Bo Rothstein, holds that as the social contract is rejected, corruption ensues. This study examines the relationship between worker rights violations and corruption using OLS regression with a range of control variables. The essay findsthat there is a relationship between the degree of worker right violations and corruption, but only in higher welfare countries. In the studied countries with the lowest welfare, the relationship does not manifest itself. The essay also finds that in comparison to other factors of rule of law worker right violations is perhaps notthe most important one when finding determinants of corruption. 1 Introduction 1 2 Theoretical assumptions 2 2.1 Previous research on corruption 2 2.2 The social contract theory of corruption and a possible mechanism 2 2.2.1 Public goods and worker right violations 3 2.2.2 A relationship based on trust 4 2.3 Reasons for investigating the potential relationship 5 2.4 Summarizing the theoretical argument 5 3 Research question and hypothesis 7 3.1 Research question 7 3.2 Hypothesis 7 4 Methodology 8 4.1 Corruption 9 4.2 Worker rights violations 9 4.2.1 The WJP Index worker right enforcement measure 11 4.3 Trust 11 4.4 Control variables 12 4.4.1 Other factors of rule of law 13 4.4.2 Regional Classification 13 4.4.3 Income groups 14 5 Analysis 15 5.1 Descriptive statistics 15 5.2 Bivariate analysis - Testing H1 16 5.2.2 Regional variance in the bivariate regression 18 5.2 Multivariate analysis 20 6 Discussion and Conclusion 26 6.1 Answering the question 26 6.1.1 Hypothesis discussion 26 6.2 Weaknesses of the essay 27 6.3 Future research and policy value 28 6.4 Ending note 29 References 30 Appendix 33 2 Regression of factors with WJP measure of guarantee of basic worker rights 35 3 Subfactors of the “Fundamental human rights” part of the WJP index 36 List of figures 37 List of Tables 38 1 1 Introduction Corruption has plagued society since the beginning of civilization, and persists as a problem in themodern age. Much has been done to try to combat corruption, but recent research would suggest that the approach chosen has been wrong all together (Rothstein, 2021). The principle-agent theory, guiding policy of international organizations since the 1990:s, has proven unable to combat corruption (Persson et.al. 2013; Ugur, Dasgupta. 2011). This has driven the development of the social contract approach to fighting corruption, championed by Rothstein (2021). The social contract idea of corruption puts a greater focuson corruption as a result of the problem of collectiveaction in the context of upholding a social contract (Rothstein, 2021, 20-26). In short, an actor in society tends to act in the way they deem is the most likely way for other actors to act. The social contract is sustained through partners of the contract keeping their promises, in the formof delivered public goods from the state side and paid taxes from the people's side(Rothstein, 2021, 21). the most important public goods(with the most impact on the contract) delivered are feasibly those affecting a lot of people. An individual's income is often crucialto their ability to sustain their livelihood and today, most people earn their income through employment in one way or another. Therefore, we find an interest in investigating the enforcement of the regulations andrights governing peoples employment; and in extension their ability to “get their bread”. From this approach an important theoretical line of reasoning can be gathered. If a government (as anactor) breaks its part of the social contract in failingto provide necessary “public goods” and thus weakening the social contract, a higher degree of corruption shouldensue. Enter workers rights violations, as people across different countries with varying degrees of development sooner or later often find themselves in a workplace relationship. If the government then cannot provide enforcement of basic worker rights, enforcement andlabor protection being the public good, what good does the populace get out of the social contract with thestate? Oskarsson et.al (2009) found that the degree of trust in a workplace(in Sweden) is affected by how fair the institutions governing the employer-employee relationship are perceived. One fundamental aspect of the institutional governing of workplace relationships then, is the enforcement of worker rights within acountry. As one important part of establishing and upholding a social contract is trust (Rothstein, 2021, 24) it would seem likely that if worker rights are continuously violated trust in society would erode, leaving the social contract vulnerable to upheaval. As suggested by Rothstein, this would nurture an advantageous playing field for corruption leaving society vulnerable to its effects. Thus, it is important to answer the question: Does the degree of worker rights violations in a country affect the level of corruptionin a country? Why explore a potential relationship between worker right violations and corruption specifically? Corruption has been shown to have a detrimental effect on GDP per capita in countries (Aidt, 2009; Mustapha 2014). Since wealth is an important part in raising the living standard of people, it becomes evident why it is important to find ways of reducing the degree of corruptionin various countries. Corruption has also shown itself to be detrimental to nearly all facets of society,undermining peoples welfare in more than just material means (Holmberg & Rothstein, 2012). 2 2 Theoretical assumptions This chapter will lay the groundwork for why this research question would be interesting to answer and what research there is that supports the claims made in this essay. First the why will be answered and following that previous research related to the topic will be presented. The theoretical argument for the hypothesis of the essay will then be laid out by presenting the social contract approach to corruption and the relationship between trust and corruption. 2.1 Previous research on corruption Plenty of research has been done on corruption, itscauses and effects over the years. A compilation of determinants of corruption can be found in the workof Michael Jetter and Christopher Parmeters (2018) study of corruption determinants, where they concludeinstitutional factors and economic factors are the prevalent determinants of corruption . Within thesefactors, rule of law has been found to be the most prevalent indicator, signifying its importance (Jetter & Parmeter, 2018, 287). Previous research that puts corruption and worker rights violations in relation to one another specifically could not be found at present, however, there is a lot of research that is related to the subject. It has been shown that a higher degree of rule of law generally meansa lower degree of corruption (I. Iwasaki. T. Suzuki,2012; Herzfeld, 2003). The assumption made on the basis of this research is that when the laws in one's own country are repeatedly prevented from functioning as they should, in this case labor law, it entails a more general impact on the rule of law in the country.In combination with Rothstein's (2021) social contract theory of corruption, we find some basis in a theoreticalframework for why worker right violations could impact the degree of corruption in a given country. From this reasoning it is considered appropriate to include worker right violations in the broader concept of rule of law. Much of previous research on corruption that has beenadopted as policy has been centered on the principal agent theory (Persson et al. 2013; Ugur and Dasgupta 2011) which this essay disregards in favor of thesocial contract approach to corruption as currently proposed by Bo Rothstein (2021). The principal-agent theory states, simplified, that if incentives are providedfor less corrupt behaviour, the “agents” will follow as being less corrupt is now a more rational choice to make (Klitgaard 1988; Rose-Ackerman 1999). Partly built on the fact that the policy created from this interpretation of corruption proved ineffective (Persson et al. 2013; Rothstein 2005; Persson et.al. 2013; Ugur, Dasgupta. 2011) a new framework for understanding corruption, the social contract theory of corruption was developed. 2.2 The social contract theory of corruption and apossible mechanism Bo Rothstein (2021) proposes a social contract approach to corruption. For this essay, the approach is useful in understanding what we are trying to measure as we imagine worker rights violations disrupting the social 3 contract. The social contract approach to corruption puts an emphasis on the problem of collective action rather than the pre-existing laws or institutions, and focuses on the social contract between the citizens themselves and the citizens and the state. Rothstein writes “A social contract[...] will only work if the citizens can trust that most other citizens will “play by the rules”and that the state will live up to what it has promised.” (Rothstein, 2021, 24). Corruption then arises because of the lack of trust between thesevarious agents in society to uphold the social contract, since they do not assume their neighbour will play by the rules, neither should they. Assuming this interpretation of the broader, more general cause of corruption, justification is found for posing this essay's research question.
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