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Institutional Enforcement, Labor-Market Rigidities, and Economic Performance

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  • César Calderón
  • Alberto Chong

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  • Gianmarco León

Abstract

This paperstudy the issue of institutional enforcement of regulations by focusing on labor-market policies and their potential link to economic performance. It test the different impacts of enforceable and non-enforceable labor regulations by proxying non-enforceable labor rigidity measures using data on conventions from the International Labor Organization (ILO). It has been argued that non-enforceable conventions -that is, those that exist on paper and are simply de jure regulations -appear to be more distortionary and tend to be the least enforced in practice (Squire and Suthiwart-Narueput, 1997). According to Freeman (1993), these conventions reflect the ideal regulatory framework from an institutionalist perspective and cover a variety of labor market issues, from child labor to placement agencies. Whereas in theory, a country`s ratification of ILO conventions gives the country legal status and thus supersedes domestic regulations relating to those issues, in practice the degree of labor-market rigidity depends on how the conventions are enforced. It is the outcome of the regulations that matters, rather than their number.

Suggested Citation

  • César Calderón & Alberto Chong & Gianmarco León, 2006. "Institutional Enforcement, Labor-Market Rigidities, and Economic Performance," Research Department Publications 4492, Inter-American Development Bank, Research Department.
  • Handle: RePEc:idb:wpaper:4492
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    1. repec:eee:jebusi:v:96:y:2018:i:c:p:42-58 is not listed on IDEAS
    2. Chen, Shiyi & Jefferson, Gary H. & Zhang, Jun, 2011. "Structural change, productivity growth and industrial transformation in China," China Economic Review, Elsevier, vol. 22(1), pages 133-150, March.

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