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Enforcement of labor regulations and job flows: evidence from Brazilian cities

Author

Listed:
  • Ana Abras

    (Universidade Federal do ABC)

  • Rita K. Almeida

    (World Bank)

  • Pedro Carneiro

    (University College London)

  • Carlos Henrique L. Corseuil

    (Instituto de Pesquisa Econômica Aplicada)

Abstract

The frequency of labor inspections in Brazil increased in the late 1990s. In the years that followed, between 2003 and 2007, formal employment expanded significantly in the country. This paper examines whether these city-level changes in labor inspections could be a significant factor contributing to the increase in the number of formal labor contracts at the city level. We exploit unique administrative data on formal employment on different indicators for job and worker flows—including job creation, destruction, reallocation, accessions, and separations—between 1996 and 2006, and on the intensity of labor inspections, both at the city level. The results show that increases in the enforcement of labor market regulations at the subnational level led to an increase in gross and net formal job creation rates and accession rates in a period when the Brazilian GDP and formal employment were growing and informality rates were declining. In contrast, increases in enforcement of regulations are not significantly correlated with changes in the rate of job destruction. This finding is robust to different specifications and is consistent with a model where formal jobs become more attractive to workers when enforcement of different types of labor regulations increases. JEL ClassificationJ21, J63, E24, H80, C23

Suggested Citation

  • Ana Abras & Rita K. Almeida & Pedro Carneiro & Carlos Henrique L. Corseuil, 2018. "Enforcement of labor regulations and job flows: evidence from Brazilian cities," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 8(1), pages 1-19, December.
    • Handle: RePEc:spr:izamig:v:8:y:2018:i:1:d:10.1186_s40176-018-0129-3
    DOI: 10.1186/s40176-018-0129-3
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    References listed on IDEAS

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    3. Boeri, Tito & Helppie, Brooke & Macis, Mario, 2008. "Labor regulations in developing countries : a review of the evidence and directions for future research," Social Protection Discussion Papers and Notes 46306, The World Bank.
    4. Kugler, Adriana & Pica, Giovanni, 2008. "Effects of employment protection on worker and job flows: Evidence from the 1990 Italian reform," Labour Economics, Elsevier, vol. 15(1), pages 78-95, February.
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    6. Mansueto Almeida, 2008. "Além da Informalidade: Entendendo como os Fiscais e Agentes de Desenvolvimento Promovem a Formalização o Crescimento de Pequenas e Médias Empresas," Discussion Papers 1353, Instituto de Pesquisa Econômica Aplicada - IPEA.
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    Cited by:

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    More about this item

    Keywords

    Formal employment growth; Job flows; Enforcement labor market regulations; Panel data;
    All these keywords.

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H80 - Public Economics - - Miscellaneous Issues - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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