Employment Laws in Developing Countries

26 Pages Posted: 17 Feb 2009

See all articles by Simeon Djankov

Simeon Djankov

London School of Economics & Political Science (LSE); Peter G. Peterson Institute for International Economics

Rita Ramalho

World Bank

Date Written: December 2008

Abstract

We survey the research on the effect of employment laws in developing countries, using papers published since 2004. The survey is further supported by cross-country correlation analyses. Both exercises show that developing countries with rigid employment laws tend to have larger informal sectors and higher unemployment, especially among young workers. A number of countries, especially in Eastern Europe and West Africa, have recently undergone significant reforms to make employment laws more flexible. Conversely, several countries in Latin America have made employment laws more rigid. These reforms are larger in magnitude than any reforms in developed countries and their study can produce new insights on the benefits of labor regulation.

Keywords: employment regulation, India, Latin America

JEL Classification: J53, J54

Suggested Citation

Djankov, Simeon and Ramalho, Rita, Employment Laws in Developing Countries (December 2008). CEPR Discussion Paper No. DP7097, Available at SSRN: https://ssrn.com/abstract=1344676

Simeon Djankov (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Peter G. Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

Rita Ramalho

World Bank ( email )

Washington, DC 20433
United States

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