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http://ssrn.com/abstract=414254
 
 

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The Regulation of Labor


Juan Carlos Botero


World Justice Project

Simeon Djankov


New Economic School (NES)

Rafael La Porta


Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

Florencio Lopez de Silanes


EDHEC Business School; National Bureau of Economic Research (NBER); Tinbergen Institute

Andrei Shleifer


Harvard University - Department of Economics; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

June 2003

NBER Working Paper No. w9756

Abstract:     
We investigate the regulation of labor markets through employment laws, collective bargaining laws, and social security laws in 85 countries. We find that richer countries regulate labor less than poorer countries do, although they have more generous social security systems. The political power of the left is associated with more stringent labor regulations and more generous social security systems. Socialist and French legal origin countries have sharply higher levels of labor regulation than do common law countries, and the inclusion of legal origin wipes out the effect of the political power of the left. Heavier regulation of labor is associated with a larger unofficial economy, lower labor force participation, and higher unemployment, especially of the young. These results are difficult to reconcile with efficiency and political power theories of institutional choice, but are broadly consistent with legal theories, according to which countries have pervasive regulatory styles inherited from the transplantation of legal systems.

Number of Pages in PDF File: 61

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Date posted: June 8, 2003  

Suggested Citation

Botero, Juan Carlos and Djankov, Simeon and La Porta, Rafael and Lopez de Silanes, Florencio and Shleifer, Andrei, The Regulation of Labor (June 2003). NBER Working Paper No. w9756. Available at SSRN: http://ssrn.com/abstract=414254

Contact Information

Juan Carlos Botero
World Justice Project ( email )
740 15th Street NW
2nd floor
Washington, DC 20005
United States
202 407 9330 (Phone)
202 747 5816 (Fax)
Simeon Djankov
New Economic School (NES) ( email )
47 Nakhimovsky Prospekt
Moscow, 117418
Russia
HOME PAGE: http://www.nes.ru
Rafael La Porta (Contact Author)
Dartmouth College - Tuck School of Business ( email )
Hanover, NH 03755
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Florencio Lopez de Silanes
EDHEC Business School ( email )
393, Promenade des Anglais BP 3116
Nice, 06202
France
+33 (0) 4 93 18 78 07 (Phone)
+33 (0) 4 93 18 78 41 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Tinbergen Institute ( email )
Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands
Andrei Shleifer
Harvard University - Department of Economics ( email )
Littauer Center
Cambridge, MA 02138
United States
617-495-5046 (Phone)
617-496-1708 (Fax)
HOME PAGE: http://www.economics.harvard.edu/~ashleife/
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
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References:  60
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