Job Creation and Labor Reform in Latin America
This paper studies the effects of labor-regulation reform using data for 10,396 firms from 14 Latin American countries. Firms are asked both how many permanent workers they would have hired and how many they would have terminated if labor regulatio...
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| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2008/09/9817220/job-creation-labor-reform-latin-america http://hdl.handle.net/10986/6774 |
| Summary: | This paper studies the effects of
labor-regulation reform using data for 10,396 firms from 14
Latin American countries. Firms are asked both how many
permanent workers they would have hired and how many they
would have terminated if labor regulations were made more
flexible. I find that making labor regulations more flexible
would lead to an average net increase of 2.08 percent in
total employment. Firms with fewer than 20 employees would
benefit the most, with average gains in net employment of
4.27 percent. Countries with more regulated labor markets
would experience larger gains in total employment. These
larger gains in total employment, however, would be achieved
through higher rates of hiring and higher rates of
termination. These results may explain why there is
substantial opposition to labor reforms despite the
predicted gains in efficiency and total employment. |
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