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Designing Labor Market Institutions in Emerging Market and Developing Economies: A Review of Evidence and IMF Policy Advice

Romain Duval () and Prakash Loungani ()

Comparative Economic Studies, 2021, vol. 63, issue 1, No 2, 83 pages

Abstract: Abstract This paper reviews the state of theory and evidence on the design of labor market institutions in emerging markets and developing economies. Compared with advanced economies, these economies tend to have larger market failures, which creates a strong case for government intervention. But they also face larger risks of policy failures due to informality and limited administrative capacity. We draw specific implications from this tension for the design unemployment insurance, job protection legislation, minimum wages and wage bargaining systems. We then use text mining techniques to identify and review a decade of IMF recommendations in these areas for 30 emerging market and developing economies.

Keywords: Labor market institutions; Employment protection; Unemployment benefits; Social assistance; Cash transfers; Minimum wage; Collective bargaining (search for similar items in EconPapers)
JEL-codes: J08 J21 J38 J58 J65 J68 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1057/s41294-020-00133-0

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