The Regulation of Labor

Simeon Djankov (), Rafael La Porta (), Florencio Lopez-de-Silane, Andrei Shleifer and Juan Botero
Authors registered in the RePEc Author Service: Florencio Lopez-de-Silanes ()

No 9756, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We investigate the regulation of labor markets through employment laws, collective bargaining laws, and social security laws in 85 countries. We find that richer countries regulate labor less than poorer countries do, although they have more generous social security systems. The political power of the left is associated with more stringent labor regulations and more generous social security systems. Socialist and French legal origin countries have sharply higher levels of labor regulation than do common law countries, and the inclusion of legal origin wipes out the effect of the political power of the left. Heavier regulation of labor is associated with a larger unofficial economy, lower labor force participation, and higher unemployment, especially of the young. These results are difficult to reconcile with efficiency and political power theories of institutional choice, but are broadly consistent with legal theories, according to which countries have pervasive regulatory styles inherited from the transplantation of legal systems.

JEL-codes: J1 J6 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-lab, nep-ltv and nep-reg
Date: Written
Note: EFG LS LE PE
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Journal Article: The Regulation of Labor (2004)
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