Substantial research looks at how trade affects inequality. Less work examines how labor regulations condition the impact of trade on inequality. Building on a factoral model of the economy, we argue that labor rights and trade have a differential impact on inequality depending on the relative abundance of labor. We hypothesize that where labor is abundant and labor standards are low, trade reduces inequality by fostering the intensive use of labor at the low end of the income distribution. In contrast, as labor becomes scarce, low labor standards increase inequality by encouraging production in low-skill manufacturing that competes with labor abundant countries. Consistent with the law of one price, manufacturing wages will fall and inequality will rise. Finally, where labor is relatively scarce, labor protections will lower inequality by encouraging production in high value-added sectors that require broadly shared skills. Thus, labor standards and trade can contribute to higher or lower inequality depending on a country's labor endowment. We test the argument using new data on labor standards around the world since 1980 and address concerns about the endogeneity of labor standards using instrumental variables regression. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]