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Who benefits from labor market regulations? Chile 1960-1998

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  • Claudio E. Montenegro
  • Carmen Pages

Abstract

Economists have examined the impact of labor market regulations on the level of employment. But there are many reasons to suspect that the impact of regulations differs across types of workers. In this paper the authors take advantage of the unusually large variance in labor policy in Chile to examine how different labor market regulations affect the distribution of employment and the employment rates across age, gender, and skill levels. To this effect, they use a sample of repeated cross-section household surveys spanning the period 1960-98 and measures of the evolution of job security provisions and minimum wages across time. The results suggest large distribution effects. The authors find that employment security provisions and minimum wages reduce the share of youth and unskilled employment as well as their employment rates. They also find large effects on the distribution of employment between women and men.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3143.

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Date of creation: 01 Oct 2003
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Handle: RePEc:wbk:wbrwps:3143

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Keywords: Labor Policies; Labor Management and Relations; Environmental Economics&Policies; Public Health Promotion; Health Monitoring&Evaluation; Environmental Economics&Policies; Health Monitoring&Evaluation; Labor Management and Relations; Labor Standards; Youth and Governance;

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References

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  1. Lazear, Edward P, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 105(3), pages 699-726, August.
  2. Lawrence F. Katz & Alan B. Krueger, 1992. "The Effect of the Minimum Wage on the Fast Food Industry," NBER Working Papers 3997, National Bureau of Economic Research, Inc.
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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.
  5. 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.
  6. 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.
  7. Bertola, Giuseppe, 1990. "Job security, employment and wages," European Economic Review, Elsevier, Elsevier, vol. 34(4), pages 851-879, June.
  8. Janet Currie & Bruce Fallick, 1993. "The Minimum Wage and the Employment of Youth: Evidence from the NLSY," NBER Working Papers 4348, National Bureau of Economic Research, Inc.
  9. Steve J. Davis & John Haltiwanger, 1991. "Gross Job Creation, Gross Job Destruction and Employment Reallocation," NBER Working Papers 3728, National Bureau of Economic Research, Inc.
  10. Bentolila, Samuel & Saint-Paul, Gilles, 1992. "A Model of Labour Demand with Linear Adjustment Costs," CEPR Discussion Papers, C.E.P.R. Discussion Papers 690, C.E.P.R. Discussion Papers.
  11. David Neumark & Mark Schweitzer & William Wascher, 2000. "The Effects of Minimum Wages Throughout the Wage Distribution," NBER Working Papers 7519, National Bureau of Economic Research, Inc.
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  13. Bazen, Stephen & Skourias, Nicolas, 1997. "Is there a negative effect of minimum wages on youth employment in France?," European Economic Review, Elsevier, Elsevier, vol. 41(3-5), pages 723-732, April.
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  16. 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.
  17. 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., Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 26(79), pages 367-384.
  18. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, Econometric Society, vol. 48(4), pages 817-38, May.
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  21. Risager, Ole & Sorensen, Jan Rose, 1997. "On the effects of firing costs when investment is endogenous: An extension of a model by Bertola," European Economic Review, Elsevier, Elsevier, vol. 41(7), pages 1343-1353, July.
  22. Sebastian Edwards & Alejandra Cox Edwards, 2000. "Economic Reforms and Labor Markets: Policy Issues and Lessons from Chile," NBER Working Papers 7646, National Bureau of Economic Research, Inc.
  23. 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, American Economic Association, vol. 90(5), pages 1397-1420, December.
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  26. repec:fth:prinin:315 is not listed on IDEAS
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Citations

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Cited by:
  1. 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, Inter-American Development Bank, Research Department 4527, Inter-American Development Bank, Research Department.
  2. Jorge Enrique Restrepo & Andrea Tokman, 2004. "Labor Markets and Institutions: An Overview," Working Papers Central Bank of Chile, Central Bank of Chile 304, Central Bank of Chile.
  3. Gindling, T.H. & Terrell, Katherine, 2009. "Minimum wages, wages and employment in various sectors in Honduras," Labour Economics, Elsevier, Elsevier, vol. 16(3), pages 291-303, June.
  4. 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.
  5. Alberto Chong & José Galdo & Jaime Saavedra-Chanduví, 2007. "Informality and Productivity in the Labor Market: Peru 1986 - 2001," Research Department Publications, Inter-American Development Bank, Research Department 4526, Inter-American Development Bank, Research Department.
  6. Fox, Louise & Oviedo, Ana Maria, 2008. "Institutions and labor market outcomes in Sub-Saharan Africa," Policy Research Working Paper Series 4721, The World Bank.
  7. Djankov, Simeon & Ramalho, Rita, 2009. "Employment laws in developing countries," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 3-13, March.
  8. Alaniz, Enrique & Gindling, T. H. & Terrell, Katherine, 2011. "The Impact of Minimum Wages on Wages, Work and Poverty in Nicaragua," IZA Discussion Papers 5702, Institute for the Study of Labor (IZA).
  9. Pablo Lavado & Gustavo Yamada, 2013. "Fear of Labor Rigidities – The Role of Expectations in Employment Growth in Peru," Working Papers, Departamento de Economía, Universidad del Pacífico 13-17, Departamento de Economía, Universidad del Pacífico, revised Dec 2013.
  10. Freeman, Richard B., 2010. "Labor Regulations, Unions, and Social Protection in Developing Countries," Handbook of Development Economics, Elsevier, Elsevier.
  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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