The Impact of Labor Market Regulation on Employment in Low‐Income Countries: A Meta‐Analysis

22 Pages Posted: 11 Jun 2014

See all articles by Shanthi Nataraj

Shanthi Nataraj

Independent

Francisco Perez‐Arce

Åbo Akademi University - Economics & Statistics

Krishna B. Kumar

University of Southern California

Sinduja Srinivasan

RAND Corporation - Pardee RAND Graduate School

Date Written: July 2014

Abstract

Controversy over labor market policy often centers on achieving a balance between preventing worker exploitation, and avoiding loss of productivity or employment through excessive regulation. Although the literature documenting the impact of labor market regulation on employment is extensive, there is a dearth of evidence on the impact of such policies in low‐income countries (LICs). Since it is easier for workers, especially women, to slip into the informal sector in LICs, regulations are likely to have stronger impacts on formal employment in these countries (but lower impacts on unemployment). We systematically reviewed available research from countries that are, or were until recently, LICs. Most studies document that more stringent labor regulations are associated with lower formal sector employment and higher informal sector employment. We also conducted a metaregression analysis of the impact of minimum wages on formal and informal employment. After controlling for publication bias, higher minimum wages are associated with lower formal employment and a higher share of informal workers.

Keywords: Employment, Labor market regulation, Low‐income countries, Meta regression analysis, Minimum Wage

Suggested Citation

Nataraj, Shanthi and Perez‐Arce, Francisco and Kumar, Krishna B. and Srinivasan, Sinduja, The Impact of Labor Market Regulation on Employment in Low‐Income Countries: A Meta‐Analysis (July 2014). Journal of Economic Surveys, Vol. 28, Issue 3, pp. 551-572, 2014, Available at SSRN: https://ssrn.com/abstract=2448763 or http://dx.doi.org/10.1111/joes.12040

Francisco Perez‐Arce

Åbo Akademi University - Economics & Statistics

Abo, FIN-20500
Finland

Krishna B. Kumar

University of Southern California ( email )

Marshall School of Business, HOH 701
Los Angeles, CA 90089
United States
213-740-6533 (Phone)
213-740-6650 (Fax)

Sinduja Srinivasan

RAND Corporation - Pardee RAND Graduate School ( email )

1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
0
Abstract Views
383
PlumX Metrics