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Labor market institutions and employment policies: the international experience

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  • Richard B.Freeman

Abstract

This paper presents evidence that legal protection of property rights is indeed an important contributor to economic success but that institutional and legal protection of the rights of labor is also associated with economic success, particularly in developing countries. Cross-country analyses show that measures of labor protections have the same relation to economic efficiency, measured by GDP per capita, as measures of protection of property, and that both protection of property rights and protection of labor rights reduce economic inequality. The results suggest that as legal protection of property gives investors the right message about economic activity: invest in productive undertakings and you will gain the fruits of your investments; legal protection of labor gives workers the right message about economic activity: work and you will gain the fruits of your labor.

Suggested Citation

  • Richard B.Freeman, 2003. "Labor market institutions and employment policies: the international experience," Estudios de Economia, University of Chile, Department of Economics, vol. 30(1 Year 20), pages 5-20, June.
  • Handle: RePEc:udc:esteco:v:30:y:2003:i:1:p:5-20
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    File URL: http://www.econ.uchile.cl/uploads/publicacion/c0582373-4807-4af8-8c8a-20e120bbfcdb.pdf
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    References listed on IDEAS

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    1. Rebecca M. Blank, 1994. "Social Protection versus Economic Flexibility: Is There a Trade-Off?," NBER Books, National Bureau of Economic Research, Inc, number blan94-1.
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    More about this item

    Keywords

    Economic Freedom; Labor Regulation; Property Protection; Employment Protection.;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions
    • J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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