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On-the-job training and rigidity of employment protection in the developing world: Evidence from differential enforcement

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  • Almeida, Rita K.
  • Aterido, Reyes

Abstract

This paper analyzes the causal effect between strict employment protection regulations and the firm incentive to invest in job training of their employees. We explore a large firm level data set across several developing countries and assume that the rigidity of labor regulations affects more the investment decision of firms that faces a rigid enforcement of labor regulations. Our findings show that differences across countries in the enforcement of more rigid employment protection regulation are associated with very small differences in the investment in job training across firms. This finding is robust across several specifications and samples.

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  • Almeida, Rita K. & Aterido, Reyes, 2011. "On-the-job training and rigidity of employment protection in the developing world: Evidence from differential enforcement," Labour Economics, Elsevier, vol. 18(S1), pages 71-82.
    • Handle: RePEc:eee:labeco:v:18:y:2011:i:s1:p:s71-s82
    DOI: 10.1016/j.labeco.2011.05.001
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    2. Gindling, T. H. & Mossaad, Nadwa & Trejos, Juan Diego, 2014. "The Consequences of Increased Enforcement of Legal Minimum Wages in a Developing Country: An Evaluation of the Impact of the Campaña Nacional de Salarios Mínimos in Costa Rica," IZA Discussion Papers 8253, Institute of Labor Economics (IZA).
    3. Bratti, Massimiliano & Conti, Maurizio & Sulis, Giovanni, 2019. "Employment Protection and Firm-provided Training: Quasi-experimental Evidence from a Labour Market Reform," GLO Discussion Paper Series 368, Global Labor Organization (GLO).
    4. Viollaz, Mariana, 2016. "Enforcement of Labor Market Regulations: Heterogeneous Compliance and Adjustment across Gender," MPRA Paper 72000, University Library of Munich, Germany.
    5. Rita Almeida & Marta Faria, 2014. "The wage returns to on-the-job training: evidence from matched employer-employee data," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-33, December.
    6. Bratti, Massimiliano & Conti, Maurizio & Sulis, Giovanni, 2021. "Employment protection and firm-provided training in dual labour markets," Labour Economics, Elsevier, vol. 69(C).
    7. Vona, Francesco, 2023. "Skills and human capital for the low-carbon transition in developing and emerging economies," FEEM Working Papers 338778, Fondazione Eni Enrico Mattei (FEEM).
    8. Benoit Dostie, 2015. "Do Train-or-Pay Schemes Really Increase Training Levels?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 54(2), pages 240-255, April.
    9. Francesco Vona, 2023. "Skills and human capital for the low-carbon transition in developing and emerging economies," Working Papers 2023.19, Fondazione Eni Enrico Mattei.
    10. Daniela Sonedda, 2020. "Guess who's there: employment protection legislation and the degree of substitutability between labour contracts," IAAEU Discussion Papers 202007, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    11. Mariana Viollaz, 2018. "Enforcement of labor market regulations: heterogeneous compliance and adjustment across gender," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-28, December.
    12. Ali Fakih & Pascal L. Ghazalian, 2015. "What factors influence firm perceptions of labour market constraints to growth in the MENA region?," International Journal of Manpower, Emerald Group Publishing Limited, vol. 36(8), pages 1181-1206, November.
    13. Bolli, Thomas & Kemper, Johanna, 2015. "Evaluating the Impact of Employment Protection on Firm-Provided Training in an RDD Framework," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112895, Verein für Socialpolitik / German Economic Association.
    14. Bratti, Massimiliano & Conti, Maurizio & Sulis, Giovanni, 2018. "Employment Protection, Temporary Contracts and Firm-Provided Training: Evidence from Italy," IZA Discussion Papers 11339, Institute of Labor Economics (IZA).
    15. Miguel Jaramillo & Bruno Escobar, 2022. "Employment protection legislation and on-the-job training in an informal labor market: Evidence from Peru," Working Papers 184, Peruvian Economic Association.
    16. Jamelia Harris, 2019. "Occupational choice of skilled workers in the presence of a large development sector: Evidence from Sierra Leone," WIDER Working Paper Series wp-2019-101, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    On-the-job training; Employment protection; Enforcement regulations; Firm level data;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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