The Right to Work – How A Human Rights Treaty Reduces The Informal Economy

Abstract

International treaties such as CEDAW have been shown to have significant effects on women’s political and health outcomes. However, we know little about CEDAW’s effect on economic outcomes. I argue that ratification reduces informal economic activity by reducing barriers for women in the formal sector. Using matching and difference-in-differences, I show ratification reduced informality by nearly half a percent of GDP globally, with heterogeneous impacts of nearly 1% of GDP on different subsamples. Additionally, I show the mechanism by which ratification works through is the elimination of formal barriers to work for women. This work contributes to research in multiple fields such as international organizations, human rights, and the informal economy literature by explicitly linking a human rights treaty to the size of a country’s informal economy. Thus, shedding light on the effects of international human rights treaties on economic outcomes and generating new insights and avenues for future research.