Labour Surplus, Worker Rights and Productivity Growth: A Comparative Analysis of Asia and Latin America

Gregory DeFreitas and Adriana Marshall

LABOUR, 1998, vol. 12, issue 3, 515-539

Abstract: How do labour market conditions, trade union rights and job security regulations affect labour productivity? This paper is the first attempt at an empirical analysis of this important question for a large sample of Asian and Latin American countries. We provide new estimates of the rates of surplus labour in 20 countries, as well as detailed tables summarizing their key regulations governing certain aspects of union activity and layoffs. Then we exploit these and other data in an econometric analysis of intercountry differentials in the growth rate of labour productivity in manufacturing during the 1980s. Among the principal results, we find that, while all else remains the same, productivity growth rates are significantly higher in countries with relatively larger labour surpluses, the effects of excess of labour on productivity growth are affected by the strength or weakness of union rights. We also find that the impacts of union rights and job security protections on productivity trends may be either positive or negative, depending on the labour market situation.

Date: 1998
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