ABSTRACT
A long tradition in political science puts labor at the center of studies pertaining to welfare state outcomes.5 Focusing primarily on the historical experience of the developed countries of Western Europe, these scholars maintain that the growth of a welfare state depends on a well-organized labor movement.6 More recently, the debate has centered on whether the increasing integration of international markets has become the most powerful force affecting the ability of governments to uphold their welfare commitments. Several scholars have convincingly shown that strong labor movements, such as those in European social democracies, can discourage
governments from reducing welfare spending during globalization.7 I challenge the generalizability of these findings using an analysis of the political power of labor in LDCs. The Stolper-Samuelson theorem implies that the most abundant factors of production will gain from increased openness. In LDCs, low-skilled labor is highly abundant, yet persistent collective-action problems accompanying globalization undermine labor's political clout in LDCs. I assess these two opposing effects by introducing a new indicator of labor power (potential labor power, PLP). My results clearly indicate that the collective-action problems of labor in countries with large pools of low-skilled and surplus workers tend to offset labor's potential political gains from globalization.
