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Enforcement of labor regulation and firm size

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  • Almeida, Rita
  • Carneiro, Pedro

Abstract

This paper investigates how the enforcement of labor regulation affects firm size and other firm characteristics in Brazil. We explore firm level data on employment, capital, and output, city level data on economic characteristics and new administrative data measuring enforcement of regulation at the city level. Since enforcement may be endogenous, we instrument this variable with the distance between the city where the firm is located and surrounding enforcement offices, while controlling for a rich set of city characteristics (such as past levels of informality in the city). We present suggestive evidence of the validity of this instrument. We find that stricter enforcement of labor regulation constrains firm size, and leads to higher unemployment. Journal of Comparative Economics 37 (1) (2009) 28-46.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Comparative Economics.

Volume (Year): 37 (2009)
Issue (Month): 1 (March)
Pages: 28-46

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Handle: RePEc:eee:jcecon:v:37:y:2009:i:1:p:28-46

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Web page: http://www.elsevier.com/locate/inca/622864

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Keywords: Enforcement of labor regulations Labor demand Employment Productivity;

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  1. ¿Se puede â??aleatorizarâ? una reforma institucional?
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