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Labor Market Regulations and the Demand for Labor in Brazil

Author

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  • Ricardo Paes de Barros
  • Carlos Henrique Corseuil
  • Gustavo Gonzaga

Abstract

The main objective of this study is to evaluate the impact of the 1988 changes in labor market regulations on the level of employment and on the time required by firms to adjust their employment level to economic fluctuations. From the many aspects of labor market regulations, this study will concentrate on those that directly influence variable labor and dismissal costs. Evaluating the impact of changes in these costs on the level of employment and speed of adjustment will be based on estimates of structural dynamic models for labor demand at different points in time before and after the 1988 constitutional change. The empirical strategy will be to estimate such models from microlongitudinal monthly data for a sample of 5,000 on manufacturing establishments, which cover the period from January 1985 to December 1997. To try to isolate the effect of the constitutional change on the parameters of the demand function from the effect of the process of trade liberalization and of the series of stabilization plans that also occurred in the end of the 80’s, we regress our monthly estimates of these parameters on a temporal indicator for the 1988 constitutional change, controlling for a variety of other macroeconomic indicators. O objetivo principal deste artigo é avaliar o impacto das mudanças na regulação do mercado de trabalho, implementadas com a Constituição de 1988, sobre o nível de emprego e a velocidade do ajuste do emprego a flutuações econômicas. Entre os vários aspectos da regulação do mercado de trabalho, nossa análise prioriza aqueles relacionados aos custos variáveis do trabalho e custos de demissão. A avaliação dos impactos da variação destes custos sobre as variáveis mencionadas será baseada em estimativas de um modelo dinâmico de caráter estrutural da demanda por trabalho em vários períodos, anteriores e posteriores à mudança constitucional de 1988. A estratégia empírica consiste em estimar o modelo por intermédio de dados microlongitudinais de periodicidade mensal. Os dados são da Pesquisa Industrial Mensal, que reportam informações sobre cerca de 5 mil estabelecimentos industriais. Nossa análise compreenderá o período de janeiro de 1985 a dezembro de 1997. Os resultados não mostram nenhuma evidência de que os parâmetros da demanda por trabalho tenham tido seus valores alterados por volta de 1988. Estes resultados continuam válidos mesmo quando se considera a influência de fatores macroeconômicos sobre a evolução mensal dos parâmetros estimados.

Suggested Citation

  • Ricardo Paes de Barros & Carlos Henrique Corseuil & Gustavo Gonzaga, 2015. "Labor Market Regulations and the Demand for Labor in Brazil," Discussion Papers 0084, Instituto de Pesquisa Econômica Aplicada - IPEA.
    • Handle: RePEc:ipe:ipetds:0084
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    References listed on IDEAS

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    1. Macedo, Roberto, 1985. "Diferenciais de salários entre empresas privadas e estatais no Brasil," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 39(4), October.
    2. Burgess, Simon M, 1992. "Asymmetric Employment Cycles in Britain: Evidence and an Explanation," Economic Journal, Royal Economic Society, vol. 102(411), pages 279-290, March.
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    Cited by:

    1. Beatriz Muriel & Carlos Gustavo Machicado, 2012. "Employment and Labor Regulation: Evidence from Manufacturing Firms in Bolivia, 1988-2007," Development Research Working Paper Series 07/2012, Institute for Advanced Development Studies.
    2. Carlos A. Arango & Ängela Milena Rojas, 2003. "Demanda Laboral en el Sector Manufacturero Colombiano:1977-1999," Borradores de Economia 2270, Banco de la Republica.
    3. Fajnzylber, Pablo & Maloney, William F., 2005. "Labor demand and trade reform in Latin America," Journal of International Economics, Elsevier, vol. 66(2), pages 423-446, July.
    4. Carlos A. Arango & Ángela Milena Rojas, 2003. "Demanda laboral y reforma comercial en el sector manufacturero colombiano: 1977-1999," Revista ESPE - Ensayos Sobre Política Económica, Banco de la República, December.
    5. Luiza Neves de Holanda Barbosa & Miguel Nathan Foguel & Charlotte Bilo, 2017. "The Brazilian Government Severance Indemnity Fund for Employees (FGTS) and unemployment insurance savings accounts in other countries: a comparative analysis of their effects on the labour market," Working Papers 164, International Policy Centre for Inclusive Growth.
    6. Gustavo Gonzaga, 2003. "Labor Turnover and Labor Legislation in Brazil," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2003), pages 165-222, August.
    7. Ricardo Paes de Barros & Carlos Henrique Corseuil, 2004. "The Impact of Regulations on Brazilian Labor Market Performance," NBER Chapters, in: Law and Employment: Lessons from Latin America and the Caribbean, pages 273-350, National Bureau of Economic Research, Inc.
    8. Koujianou Goldberg, Pinelopi & Pavcnik, Nina, 2003. "The response of the informal sector to trade liberalization," Journal of Development Economics, Elsevier, vol. 72(2), pages 463-496, December.
    9. repec:bdr:ensayo:v::y:2003:i:44:p:96-154 is not listed on IDEAS
    10. Rita Almeida & Pedro Carneiro, Renata Narita, 2013. "Producing Higher Quality Jobs: Enforcement of Mandated Benefits across Brazilian Cities between 1996-2007," Working Papers, Department of Economics 2013_22, University of São Paulo (FEA-USP).
    11. Orellano, Veronica I. F. & Picchetti, Paulo, 2005. "An Analysis of Quit and Dismissal Determinants between 1988 and 1999 using the Bivariate Probit Model," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 25(1), May.
    12. Joana Simões de Melo Costa, 2016. "Effects of domestic worker legislation reform in Brazil," Working Papers 149, International Policy Centre for Inclusive Growth.

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    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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