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The Regulation of Labor

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  • Juan Botero
  • Simeon Djankov
  • Rafael LaPorta
  • Florencio López-de-Silanes
  • Andrei Shleifer

Abstract

We investigate the regulation of labor markets through employment, collective relations, and social security laws in 85 countries. We find that the political power of the left is associated with more stringent labor regulations and more generous social security systems, and that socialist, French, and Scandinavian legal origin countries have sharply higher levels of labor regulation than do common law countries. However, the effects of legal origins are larger, and explain more of the variation in regulations, than those of politics. Heavier regulation of labor is associated with lower labor force participation and higher unemployment, especially of the young. These results are most naturally consistent with legal theories, according to which countries have pervasive regulatory styles inherited from the transplantation of legal systems.

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Paper provided by Harvard University OpenScholar in its series Working Paper with number 19483.

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Handle: RePEc:qsh:wpaper:19483

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  1. 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.
  2. Raghuram G. Rajan & Luigi Zingales, 2001. "The Great Reversals: The Politics of Financial Development in the 20th Century," CRSP working papers 526, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
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  1. Labor regulations
    by Masa in Devecondata on 2009-11-27 16:39:00
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