Labor productivity and the role of labor market deregulation: Are there limits? Evidence from BRICS

Oleg Mariev, Sophia V. Turkanova and Suleiman Mamman

Journal of Policy Modeling, 2025, vol. 47, issue 6, 1264-1283

Abstract: Labor market deregulation has been a contentious issue over time, with debates mainly focusing on its macroeconomic effects. To this end, this study examines the impact of labor deregulation on labor productivity in BRICS countries, premised on the endogenous growth model. To account for strong endogeneity bias, this study uses the bias-corrected method of moments estimators for annual data from 1991 to 2023. The main empirical findings reveal that labor productivity persists over time. Secondly, it was observed that deregulation has an asymmetric effect with initial deregulation enhancing productivity levels, but excessive deregulation leads to diminishing returns. Also, capital investment was observed to boosts productivity levels, while the effects of human capital development, migration flow, and total factor productivity are mixed and inconclusive. One of the policy implications of the study highlights the need for balanced deregulation to maximize productivity gains without adverse effects. More so, the study highlights the heterogeneity among BRICS countries, suggesting the need for collaborative efforts and tailored policies to enhance productivity in the long term.

Keywords: Labor productivity; Deregulation; Migration; Economic development; BRICS; Asymmetries (search for similar items in EconPapers)
JEL-codes: E24 J08 J5 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:47:y:2025:i:6:p:1264-1283

DOI: 10.1016/j.jpolmod.2025.09.002

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