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Who Benefits from Labor Market Regulations? Chile 1960-1998

In: Labor Markets and Institutions

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  • Claudio Montenegro

    (Banco Mundial)

  • Carmen Pagés

    (Inter-American Development Bank)

Abstract

Economists have examined the impact of labor market regulations on the level of employment. However, there are many reasons to suspect that the impact of regulations differs across types of workers. In this paper we take advantage of the unusual large variance in labor policy in Chile to exa mine how different labor market regulations affect the distribution of employment and the employment rates across age, gender and skill levels. To this effect, we use a sample of repeated cross-section household surveys spanning the period 1960-1998 and measures of the evolution of job security provisions and minimum wages across time. Our results suggest large distribution effects. We find that employment security provisions and minimum wages reduce the share of youth and unskilled employment as well as their employment rates. We also find large effects on the distribution of employment between women and men.

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Bibliographic Info

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This chapter was published in: Jorge Restrepo & Andrea Tokman R. & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.) Labor Markets and Institutions, , chapter 4, pages 077-114, 2005.

This item is provided by Central Bank of Chile in its series Central Banking, Analysis, and Economic Policies Book Series with number v08c04pp077-114.

Handle: RePEc:chb:bcchsb:v08c04pp077-114

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  1. Lawrence F. Katz & Alan B. Krueger, 1992. "The effect of the minimum wage on the fast-food industry," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 46(1), pages 6-21, October.
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  4. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, Econometric Society, vol. 48(4), pages 817-38, May.
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  6. Carmen Pagés-Serra & James J. Heckman, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," Research Department Publications, Inter-American Development Bank, Research Department 4227, Inter-American Development Bank, Research Department.
  7. Giuseppe Bertola, 1991. "Labor Turnover Costs and Average Labor Demand," NBER Working Papers 3866, National Bureau of Economic Research, Inc.
  8. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, American Economic Association, vol. 84(4), pages 772-93, September.
  9. Alan B. Krueger & David Card, 2000. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Reply," American Economic Review, American Economic Association, American Economic Association, vol. 90(5), pages 1397-1420, December.
  10. Neumark, D. & Schweitzer, M. & Wascher, W., 1999. "The Effect of Minimum Wages Throughout the Wage Distribution," Papers, London School of Economics - Centre for Labour Economics 9919, London School of Economics - Centre for Labour Economics.
  11. Bertola, Giuseppe, 1990. "Job security, employment and wages," European Economic Review, Elsevier, Elsevier, vol. 34(4), pages 851-879, June.
  12. Janet Currie & Bruce C. Fallick, 1996. "The Minimum Wage and the Employment of Youth Evidence from the NLSY," Journal of Human Resources, University of Wisconsin Press, vol. 31(2), pages 404-428.
  13. Carmen Pagés-Serra, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," JOURNAL OF LACEA ECONOMIA, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
  14. Edwards, Sebastian & Edwards, Alejandra Cox, 1991. "Monetarism and Liberalization," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226184890.
  15. Lang, Kevin & Kahn, Shulamit, 1998. "The effect of minimum-wage laws on the distribution of employment: theory and evidence," Journal of Public Economics, Elsevier, Elsevier, vol. 69(1), pages 67-82, July.
  16. Giuseppe Bertola & Francine D. Blau & Lawrence M. Kahn, 2002. "Labor Market Institutions and Demographic Employment Patterns," NBER Working Papers 9043, National Bureau of Economic Research, Inc.
  17. Raimundo Soto, . "Trade liberalization in Chile:Lessons for Hemispheric Integration," ILADES-Georgetown University Working Papers, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines inv095, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
  18. Risager, Ole & Sorensen, Jan Rose, 1997. "On the effects of firing costs when investment is endogenous: An extension of a model by Bertola," European Economic Review, Elsevier, Elsevier, vol. 41(7), pages 1343-1353, July.
  19. Bazen, Stephen & Skourias, Nicolas, 1997. "Is there a negative effect of minimum wages on youth employment in France?," European Economic Review, Elsevier, Elsevier, vol. 41(3-5), pages 723-732, April.
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  23. Hopenhayn, Hugo & Rogerson, Richard, 1993. "Job Turnover and Policy Evaluation: A General Equilibrium Analysis," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(5), pages 915-38, October.
  24. Carmen Pagés & Claudio E. Montenegro, 2007. "Job security and the age-composition of employment: evidence from Chile," Estudios de Economia, University of Chile, Department of Economics, University of Chile, Department of Economics, vol. 34(2 Year 20), pages 109-139, December.
  25. Ricardo Paredes & Luis Riveros, 1989. "Sesgo de Selección y el Efecto de los Salarios Mínimos," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 26(79), pages 367-384.
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Citations

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Cited by:
  1. Tim H. Gindling & Katherine Terrell, 2010. "The Impact of Minimum Wages on Wages, Work and Poverty in Nicaragua," UMBC Economics Department Working Papers 10-126, UMBC Department of Economics.
  2. Víctor O. Lima & Ricardo D. Paredes, 2007. "The dynamics of the labor markets in Chile," Estudios de Economia, University of Chile, Department of Economics, University of Chile, Department of Economics, vol. 34(2 Year 20), pages 163-183, December.
  3. Alberto Chong & José Galdo & Jaime Saavedra-Chanduví, 2007. "Informalidad y Productividad en el Mercado Laboral: Perú 1986-2001 (Informality and Productivity in the Labor Market: Peru 1986 - 2001)," Research Department Publications, Inter-American Development Bank, Research Department 4527, Inter-American Development Bank, Research Department.
  4. Arias, Omar & Blom, Andreas & Bosch, Mariano & Cunningham, Wendy & Fiszbein, Ariel & Lopez Acevedo, Gladys & Maloney, William & Saavedra, Jaime & Sanchez-Paramo, Carolina & Santamaria, Mauricio & Siga, 2005. "Pending issues in protection, productivity growth, and poverty reduction," Policy Research Working Paper Series 3799, The World Bank.
  5. Djankov, Simeon & Ramalho, Rita, 2009. "Employment laws in developing countries," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 3-13, March.
  6. Gindling, T.H. & Terrell, Katherine, 2009. "Minimum wages, wages and employment in various sectors in Honduras," Labour Economics, Elsevier, Elsevier, vol. 16(3), pages 291-303, June.
  7. Carmen Pagés & Claudio E. Montenegro, 2007. "Job security and the age-composition of employment: evidence from Chile," Estudios de Economia, University of Chile, Department of Economics, University of Chile, Department of Economics, vol. 34(2 Year 20), pages 109-139, December.
  8. Pablo Lavado & Gustavo Yamada, 2013. "Fear of Labor Rigidities – The Role of Expectations in Employment Growth in Peru," Working Papers, Departamento de Economía, Universidad del Pacífico 13-17, Departamento de Economía, Universidad del Pacífico, revised Dec 2013.
  9. José Galdo & Jaime Saavedra-Chanduví & Alberto E. Chong, 2007. "Informality and Productivity in the Labor Market: Peru 1986 - 2001," IDB Publications 6849, Inter-American Development Bank.
  10. Freeman, Richard B., 2010. "Labor Regulations, Unions, and Social Protection in Developing Countries," Handbook of Development Economics, Elsevier, Elsevier.
  11. Fox, Louise & Oviedo, Ana Maria, 2008. "Institutions and labor market outcomes in Sub-Saharan Africa," Policy Research Working Paper Series 4721, The World Bank.
  12. Jorge Enrique Restrepo & Andrea Tokman, 2004. "Labor Markets and Institutions: An Overview," Working Papers Central Bank of Chile, Central Bank of Chile 304, Central Bank of Chile.

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