Low-Skilled Labor Shortages Contribute to Forced Labor — Evidence From Myanmar and Thailand

Over 25 million people are victims of forced labor globally; the vast majority are low-skilled migrant workers who migrated from a different country or region. Evidence so far indicates that much of labor exploitation has roots in the recruitment process. This motivates the question of whether there are characteristics common to low-skilled labor recruitment that can serve as reliable indicators of forced labor risk in the workplace. Leveraging unique data sets from the Myanmar Government and the Issara Institute on weekly demand for Burmese migrant workers in Thailand by Thai companies, and on worker voice hot-line data from 2018-2020, we find that unexpected labor shortages in the workplace significantly increase migrant worker abuse. Using an Instrumental Variable (IV) approach, we find that an increase of one standard deviation in low-skilled labor shortages in the workplace leads to a 34.5% or higher increase in worker-reported labor abuse in the two to four weeks that follow. Shocks of such magnitude occur about 10% of the time. We also find a visible correlation between provinces whose labor markets are more stressed on average and the frequency of unexpected labor shortages in a province, suggesting that stressed labor markets are also more prone to unexpected shortages and abuse. Overall, this research suggests that inefficiencies in matching supply and demand for low-skilled labor play an important role in determining labor abuse outcomes, and that reducing these inefficiencies in the labor recruitment process could help mitigate labor abuse.