Does Employment Protection Unprotect Workers? The Labor Market Effects of Job Reinstatements in Peru

Bruno Jimenez and Silvio Rendon

No 13858, IZA Discussion Papers from IZA Network @ LISER

Abstract: We investigate the labor market effects of the reestablishment of private-sector workers' right to reinstatement for unfair dismissals, which occurred in 2002 in Peru. Using data from Peruvian Household Surveys from 2004 to 2015, and the Specialized Employment Survey 1998-2001, we estimate a quasi-experimental difference-in-difference model. We find that this reestablishment is associated with increases in new contracting in the private sector, by 5.9 % for permanent hiring and 3.0 % for temporary hiring. By means of placebo tests, we only fund a causal effect of the reinstatement on temporary hiring, not on permanent hiring. We also find a negative association between reinstatements and real wages of 3.9 %, but placebo tests indicate that this is not a causal effect. Our findings call into question the effectiveness of removing reinstatement laws as a policy to increase permanent hiring and wages.

Keywords: labor costs; employment; fixed-term contracts (search for similar items in EconPapers)
JEL-codes: E24 J23 J65 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2020-11
New Economics Papers: this item is included in nep-law, nep-lma and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published - published in: Labour Economics, 2023, 80, 102286

Downloads: (external link)
https://docs.iza.org/dp13858.pdf (application/pdf)

Related works:
Journal Article: Does employment protection unprotect workers? The labor market effects of job reinstatements in Peru (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp13858

Access Statistics for this paper

More papers in IZA Discussion Papers from IZA Network @ LISER Contact information at EDIRC.
Bibliographic data for series maintained by Mark Fallak ().