The Outcome of Ngos Activism on Domestic Firms in Developing Countries
Abstract: Many Developing Countries ratified ILO Fundamental Conventions and raised domestic labor laws. Multinational companies producing in these countries pay more when international NGOs campaigns take place and reputation counts. However, whether domestic NGOs' actions benefit local workers outside MNEs affiliates in host countries remains an open issue. This paper addresses the impact of NGOs activism on wages and employment in domestic firms in Indonesia. We use data on Indonesian manufacturing firms, before and after the authorization of labor unions, in presence or not of labor NGOs, in domestic firms or not. We find that the NGOs activism led a large increase in wage for unskilled workers in small and domestic firms after the authorization of labor unions. This suggests that non-governmental labor organizations have an impact on labor market outcomes as a complement of traditional labor institutions.
