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Who Benefits from Labor Market Regulations? Chile, 1960–1998

In: Law and Employment: Lessons from Latin America and the Caribbean

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  • Claudio E. Montenegro
  • Carmen Pagés

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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This chapter was published in:

  • James J. Heckman & Carmen Pagés, 2004. "Law and Employment: Lessons from Latin America and the Caribbean," NBER Books, National Bureau of Economic Research, Inc, number heck04-1, Ekim.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 10074.

    Handle: RePEc:nbr:nberch:10074

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    4. Giuseppe Bertola, 1991. "Labor Turnover Costs and Average Labor Demand," NBER Working Papers 3866, National Bureau of Economic Research, Inc.
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    7. 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.
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    9. Lawrence Katz & Alan Krueger, 1992. "The Effect of the Minimum Wage on the Fast Food Industry," Working Papers 678, Princeton University, Department of Economics, Industrial Relations Section..
    10. Carmen Pagés-Serra & James J. Heckman, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," IDB Publications 4119, Inter-American Development Bank.
    11. Lang, Kevin & Kahn, Shulamit, 1998. "The effect of minimum-wage laws on the distribution of employment: theory and evidence," Journal of Public Economics, Elsevier, vol. 69(1), pages 67-82, July.
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    15. Bertola, Giuseppe & Blau, Francine D & Kahn, Lawrence, 2002. "Labour Market Institutions and Demographic Employment Patterns," CEPR Discussion Papers 3448, C.E.P.R. Discussion Papers.
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    19. Bazen, Stephen & Skourias, Nicolas, 1997. "Is there a negative effect of minimum wages on youth employment in France?," European Economic Review, Elsevier, vol. 41(3-5), pages 723-732, April.
    20. 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.
    21. Bertola, Giuseppe, 1990. "Job security, employment and wages," European Economic Review, Elsevier, vol. 34(4), pages 851-879, June.
    22. 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, vol. 90(5), pages 1397-1420, December.
    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. 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., vol. 26(79), pages 367-384.
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    26. 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.
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    Cited by:
    1. Jorge Enrique Restrepo & Andrea Tokman, 2004. "Labor Markets and Institutions: An Overview," Working Papers Central Bank of Chile 304, Central Bank of Chile.
    2. Fox, Louise & Oviedo, Ana Maria, 2008. "Institutions and labor market outcomes in Sub-Saharan Africa," Policy Research Working Paper Series 4721, The World Bank.
    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 4527, Inter-American Development Bank, Research Department.
    4. Alaniz, Enrique & Gindling, T.H. & Terrell, Katherine, 2011. "The impact of minimum wages on wages, work and poverty in Nicaragua," Labour Economics, Elsevier, vol. 18(S1), pages S45-S59.
    5. Djankov, Simeon & Ramalho, Rita, 2008. "Employment Laws in Developing Countries," CEPR Discussion Papers 7097, C.E.P.R. Discussion Papers.
    6. Gindling, T.H. & Terrell, Katherine, 2009. "Minimum wages, wages and employment in various sectors in Honduras," Labour Economics, Elsevier, vol. 16(3), pages 291-303, June.
    7. Freeman, Richard B., 2010. "Labor Regulations, Unions, and Social Protection in Developing Countries," Handbook of Development Economics, Elsevier, Elsevier.
    8. Pablo Lavado & Gustavo Yamada, 2013. "Fear of Labor Rigidities – The Role of Expectations in Employment Growth in Peru," Working Papers 13-17, Departamento de Economía, Universidad del Pacífico, revised Dec 2013.
    9. Alberto Chong & José Galdo & Jaime Saavedra-Chanduví, 2007. "Informality and Productivity in the Labor Market: Peru 1986 - 2001," Research Department Publications 4526, Inter-American Development Bank, Research Department.
    10. 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.
    11. 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.
    12. 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.

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