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The political economy of labor market deregulation during IMF interventions

Author

Listed:
  • Bernhard Reinsberg
  • Thomas Stubbs
  • Alexander Kentikelenis
  • Lawrence King

Abstract

This study examines the relationship between policy interventions by the International Monetary Fund (IMF) and de jure labor rights. Combining two novel data sets with unprecedented country-year coverage – leximetric data on labor laws and disaggregated data on IMF conditionality – our analysis of up to 70 developing countries from 1980 to 2014 demonstrates that IMF-mandated labor market policy measures significantly reduce both individual and collective labor rights. Once we control for the effect of labor market policy measures, however, we find that collective labor rights increase in the wake of IMF programs. We argue that this result is explained by the impact of union pressure on governments which, in such a context, are imbued with the policy space to respond to domestic interest groups. The study has broader theoretical implications as to when international organizations are effective in constraining governments’ choices.

Suggested Citation

  • Bernhard Reinsberg & Thomas Stubbs & Alexander Kentikelenis & Lawrence King, 2019. "The political economy of labor market deregulation during IMF interventions," International Interactions, Taylor & Francis Journals, vol. 45(3), pages 532-559, May.
    • Handle: RePEc:taf:ginixx:v:45:y:2019:i:3:p:532-559
    DOI: 10.1080/03050629.2019.1582531
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    Citations

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    Cited by:

    1. Matthias Busse & Tim Vogel, 2024. "Trade Liberalization, IMF Conditionality, and Policy Substitution in Developing Countries," Kyklos, Wiley Blackwell, vol. 77(2), pages 256-284, May.
    2. Chletsos, Michael & Sintos, Andreas, 2021. "Hide and seek: IMF intervention and the shadow economy," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 292-319.
    3. Andreas Kern & Bernhard Reinsberg & Claire Lee, 2025. "The unintended consequences of IMF programs: Women left behind in the labor market," The Review of International Organizations, Springer, vol. 20(4), pages 741-767, December.
    4. Iasmin Goes, 2023. "Examining the effect of IMF conditionality on natural resource policy," Economics and Politics, Wiley Blackwell, vol. 35(1), pages 227-285, March.
    5. Chahine, Salim & Panizza, Ugo & Suedekum, Guilherme, 2025. "IMF programs and borrowing costs does size matter?," European Economic Review, Elsevier, vol. 177(C).
    6. Saliha Metinsoy, 2025. "Who adjusts? Exchange rate regimes and finance versus labor under IMF programs," The Review of International Organizations, Springer, vol. 20(3), pages 631-668, September.
    7. Kathleen J. Brown, 2025. "Why hide? Africa’s unreported debt to China," The Review of International Organizations, Springer, vol. 20(1), pages 1-32, March.
    8. Forster, Timon & Kentikelenis, Alexander E. & Stubbs, Thomas H. & King, Lawrence P., 2020. "Globalization and health equity: The impact of structural adjustment programs on developing countries," Social Science & Medicine, Elsevier, vol. 267(C).
    9. Reinsberg, Bernhard & Kern, Andreas & Rau-Göhring, Matthias, 2021. "The political economy of IMF conditionality and central bank independence," European Journal of Political Economy, Elsevier, vol. 68(C).
    10. Bernhard Reinsberg & Thomas Stubbs & Alexander Kentikelenis & Lawrence King, 2020. "Bad governance: How privatization increases corruption in the developing world," Regulation & Governance, John Wiley & Sons, vol. 14(4), pages 698-717, October.
    11. Bomprezzi, Pietro & Marchesi, Silvia, 2023. "A firm level approach on the effects of IMF programs," Journal of International Money and Finance, Elsevier, vol. 132(C).
    12. Vrolijk, Kasper, 2023. "How does globalisation affect social cohesion?," IDOS Discussion Papers 5/2023, German Institute of Development and Sustainability (IDOS).
    13. Brendan Skip Mark & Huei-Jyun Ye & Andrew Foote & Tiffani Crippin, 2021. "It’s a Hard-Knock Life: Child Labor Practices and Compliance with IMF Agreements," Social Sciences, MDPI, vol. 10(5), pages 1-21, May.
    14. Jianchun Fang & Giray Gozgor & James H. Nolt, 2022. "Globalisation, economic uncertainty and labour market regulations: Implications for the COVID‐19 crisis," The World Economy, Wiley Blackwell, vol. 45(7), pages 2165-2187, July.
    15. Chletsos, Michael & Sintos, Andreas, 2023. "The effects of IMF conditional programs on the unemployment rate," European Journal of Political Economy, Elsevier, vol. 76(C).

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