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The Paradox of Effective Labor Regulation

Author

Listed:
  • Lucas Ronconi
  • Mercedes Sidders
  • Benjamin Stanwix

    (Centro de Investigación y Acción Social (CIAS) and CONICET)

Abstract

Why some countries choose a combination of highly protective laws and little enforcement is a puzzle that cannot be rationalized with traditional explanations. This paper collects administrative, legal and household survey data to emphasize a stylized fact about labor regulation that has been generally overlooked – countries with more protective employment regulations tend to enforce these regulations less, and usually focus their enforcement efforts on large firms.

Suggested Citation

  • Lucas Ronconi & Mercedes Sidders & Benjamin Stanwix, 2016. "The Paradox of Effective Labor Regulation," Working Papers 201605, University of Cape Town, Development Policy Research Unit.
    • Handle: RePEc:ctw:wpaper:201605
    as

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    File URL: https://commerce.uct.ac.za/sites/default/files/content_migration/commerce_uct_ac_za/1093/files/DPRU%2520WP201605.pdf
    File Function: First version, 2016
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    References listed on IDEAS

    as
    1. Andrei Shleifer & Florencio Lopez-de-Silanes & Rafael La Porta, 2008. "The Economic Consequences of Legal Origins," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 285-332, June.
    2. 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, May.
    3. Juan C. Botero & Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "The Regulation of Labor," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(4), pages 1339-1382.
    4. Ravi KANBUR & Lucas RONCONI, 2018. "Enforcement matters: The effective regulation of labour," International Labour Review, International Labour Organization, vol. 157(3), pages 331-356, September.
    5. Lucas Ronconi, 2015. "Enforcement and the Effective Regulation of Labor," IDB Publications (Working Papers) 91777, Inter-American Development Bank.
    6. Haroon Bhorat & Ravi Kanbur & Benjamin Stanwix, 2017. "Minimum Wages in Sub-Saharan Africa: A Primer," The World Bank Research Observer, World Bank, vol. 32(1), pages 21-74.
    7. Ronconi, Lucas, 2015. "Enforcement and the Effective Regulation of Labor," IDB Publications (Working Papers) 7296, Inter-American Development Bank.
    8. Djankov, Simeon & Ramalho, Rita, 2009. "Employment laws in developing countries," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 3-13, March.
    9. Heckman, James J. & Pages, Carmen (ed.), 2004. "Law and Employment," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226322827, December.
    10. Feldmann, Horst, 2009. "The unemployment effects of labor regulation around the world," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 76-90, March.
    11. James J. Heckman & Carmen Pagés, 2004. "Introduction to "Law and Employment: Lessons from Latin American and the Caribbean"," NBER Chapters, in: Law and Employment: Lessons from Latin America and the Caribbean, pages 1-108, National Bureau of Economic Research, Inc.
    12. Galli, Rossana & Kucera, David, 2004. "Labor Standards and Informal Employment in Latin America," World Development, Elsevier, vol. 32(5), pages 809-828, May.
    13. Rita Almeida & Lucas Ronconi, 2016. "Labor Inspections in the Developing World: Stylized Facts from the Enterprise Survey," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(3), pages 468-489, July.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Haroon Bhorat & Ravi Kanbur & Benjamin Stanwix & Amy Thornton, 2021. "Measuring Multi‐Dimensional Labour Law Violation with an Application to South Africa," British Journal of Industrial Relations, London School of Economics, vol. 59(3), pages 928-961, September.

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    More about this item

    Keywords

    Labor Regulation; Enforcement; Firm Size;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • K2 - Law and Economics - - Regulation and Business Law
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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