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Globalization, Labor Market Regulation, and Firm Behavior

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  • Meyer, Moritz

    (World Bank)

  • Vandenberg, Paul

    (Asian Development Bank)

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    Abstract

    The paper analyzes the link between firm characteristics and labor market regulation in five Asian economies—Bangladesh, Indonesia, Pakistan, the Philippines, and Viet Nam. Labor market policies and labor standards do not only affects workers, but also influence firms’ investment and employment decisions. The empirical analysis uses information from enterprise surveys. Empirical results describe systematic differences in the perceived level of labor market regulation. Controlling for a wide set of firm characteristics, the perceived level of labor market regulation is found to vary between firms that participate in global trade as against those supplying the domestic market. The in-country location of a firm is also a significant determinant. The level of labor intensity explains variation in the reported level of labor market regulation between firms. Findings support a better understanding of the types of firms that find labor market regulation to be an obstacle to their operations, and can be used to design targeted policy interventions.

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    File URL: http://www.adb.org/sites/default/files/pub/2013/ewp-361.pdf
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    Bibliographic Info

    Paper provided by Asian Development Bank in its series ADB Economics Working Paper Series with number 361.

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    Length: 27 pages
    Date of creation: 13 Aug 2013
    Date of revision:
    Handle: RePEc:ris:adbewp:0361

    Note: http://www.adb.org/sites/default/files/pub/2013/ewp-361.pdf
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    Related research

    Keywords: labor market institutions (regulation); trade and labor markets; developing countries;

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    1. Di Tella, Rafael & MacCulloch, Robert, 2005. "The consequences of labor market flexibility: Panel evidence based on survey data," European Economic Review, Elsevier, vol. 49(5), pages 1225-1259, July.
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    4. Rana Hasan & Devashish Mitra & K.V. Ramaswamy, 2003. "Trade Reforms, Labor Regulations and Labor-Demand Elasticities: Empirical Evidence from India," Economics Study Area Working Papers 59, East-West Center, Economics Study Area.
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    7. Freund, Caroline & Bolaky, Bineswaree, 2008. "Trade, regulations, and income," Journal of Development Economics, Elsevier, vol. 87(2), pages 309-321, October.
    8. Feldmann, Horst, 2009. "The unemployment effects of labor regulation around the world," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 76-90, March.
    9. Almeida, Rita & Carneiro, Pedro, 2008. "Enforcement of labor regulation and firm size," Social Protection Discussion Papers 43675, The World Bank.
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    12. Poschke, Markus, 2009. "Employment protection, firm selection, and growth," Journal of Monetary Economics, Elsevier, vol. 56(8), pages 1074-1085, November.
    13. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Juan Botero, 2003. "The Regulation of Labor," NBER Working Papers 9756, National Bureau of Economic Research, Inc.
    14. Dutta Roy, Sudipta, 2004. "Employment dynamics in Indian industry: adjustment lags and the impact of job security regulations," Journal of Development Economics, Elsevier, vol. 73(1), pages 233-256, February.
    15. Pierre Cahuc & André Zylberberg, 2004. "Labor Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 026203316x, January.
    16. Pedro Portugal & Olivier Blanchard, 2001. "What Hides Behind an Unemployment Rate: Comparing Portuguese and U.S. Labor Markets," American Economic Review, American Economic Association, vol. 91(1), pages 187-207, March.
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