Research on Labor market Regulation

Doing Business considers the following list of papers as relevant for research on labor market regulations. Some papers—denoted with an asterisk (*)—use Doing Business data for their empirical analysis. If we've missed any important research, please let us know.

Author(s): Kuddo, Arvo

Journal: SP Discussion Paper. No. 0920. Washington. D.C. World Bank. 2009 

Abstract: This study focuses on internationally accepted labor standards and norms governing the individual employment contract, including International Labor Organization (ILO) conventions and recommendations, European Union (EU) labor standards, and the European community social charter. The study also analyzes relevant provisions in the main labor law of each Eastern European and Central Asian (ECA) country associated with commencing or terminating employment and during the period of employment. References are made to relevant practices from EU15 countries. Overall, despite similar origin of country labor laws, the current set of labor regulations in the region provides a wide array of legal solutions. The minimum content of the employment contract in most ECA countries coincides, and goes beyond, the requirements of the labor standards even in the countries that are non-signatories of relevant treaties. Some of these entitlements, however, have the potential to adversely affect labor market participation.  

Author(s): Aleksynska, Mariya; Schindle, Martin

Journal: IMF Working Paper. 2011  

Abstract: This paper documents a new database of labor market regulations during 1980-2005 in 91 countries, including low-, middle- and high-income countries, and contains information on unemployment insurance systems, minimum wage regulations, and employment protection legislation. In this paper, we provide details regarding the data, methodology and sources. Descriptive statistics indicate that there exists substantial heterogeneity in labor market institutions across regions and income groupings, and that much of the sample variation is driven by institutional changes over time in low- and middle-income countries. All indicators are at an annual frequency, allowing for the dating of major changes in regulation, and are based on data from a variety of sources, including the ILO, OECD and national agencies. 

Author(s): Benjamin, Paul, Haroon Bhorat, and Halton Cheadle

Journal: International Labour Review 149.1. 2010. 

Abstract: The “Employing Workers” indices compiled from the World Bank’s Doing Business (DB) survey for 2006 presented mixed results as to the nature and extent of labour regulation in South Africa. Arguing that these measures – with their narrow focus on legislation – provide only a partial picture, the authors suggest and investigate three possible extensions to the DB framework with the aim of achieving a more realistic representation of labour regulation in practice, namely: “micro-legislation”, labour market institutions and judicial interpretation. They conclude with a plea for taking account of the crucial importance of these features in the assessment of labour regulation frameworks. 

Author(s): Natarajan, Packirisamy, and Mohammad Tanzeem Raza

Journal: Journal of Smart Economic Growth 2.2 (2017): 46-69 

Abstract: India, a nation of second largest population in the world is well becoming a largest nation in creating entrepreneurs. The creation of entrepreneurs depends upon the Doing Business policies, procedures and regulations. A business-friendly ecosystem is a pre-requisite for the growth and development of a nation. By considering the indicators of doing business namely- starting a business, getting electricity, dealing with construction permits, registering property,  getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and labor market regulation,  this paper analytically investigate on ease of doing business in compliance with relevant regulations and procedures. This study also investigate the measures taken by the government to accentuate ease of doing business. The policy reforms by Government will serve as an incubator to make entrepreneurship viral in the country. It requires committed effort of all supporting institutions and primarily entrepreneurship compliance.  

Author(s): McMillan, Margaret, Dani Rodrik, and Claudia Sepulveda 

Journal: No. w23378. National Bureau of Economic Research, 2017  

Abstract: Developing countries made considerable gains during the first decade of the 21st century. Their economies grew at unprecedented rates, resulting in large reductions in extreme poverty and a significant expansion of the middle class. But more recently that progress has slowed with an economic environment of lackluster global trade, not enough jobs coupled with skills mismatches, continued globalization and technological change, greater income inequality, unprecedented population aging in richer countries, and youth bulges in the poorer ones. This essay examines how seven key countries fared from 1990-2010 in their development quest. The sample includes seven developing countries—Botswana, Ghana, Nigeria, Zambia, India, Vietnam and Brazil —all of which experienced rapid growth in recent years, but for different reasons. The patterns of growth are analyzed in each of these countries using a unifying framework which draws a distinction between the “structural transformation” and “fundamentals” challenge in growth. Out of these seven countries, the traditional path to rapid growth of export oriented industrialization only played a significant role in Vietnam.  

Author(s): Mucciarelli, Federico M.  

Journal: Journal of Law and Society 44.2 (2017): 255-282 

Abstract: When an employer becomes insolvent, employees’ claims for unpaid wages and contributions may be protected through statutory priorities, social security schemes, or a combination of both. This article compares the interplay of employee statutory priorities, if they exist, and social security schemes in France, Germany, and the United Kingdom. While France protects employees through both a statutory priority and a social security scheme, Germany and the United Kingdom have progressively reduced employment protection over the last forty years. Theories of varieties of capitalism and of legal origins cannot fully describe and explain the development of employment protection strategies in these countries. The evolution of the German and British regimes, in particular, are better explained as a sign of profound cultural shifts regarding the position of labour within firms and vis-à-vis other stakeholders. Finally, I also show that a cumulative application of employee priorities and insurance schemes is not necessarily redundant. 

Author(s): Kanbur, Ravi, and Lucas Ronconi  

Journal: CEPR Discussion Paper No. DP11098 

Abstract: This paper provides, to our knowledge for the first time, cross-country measures of enforcement of labor law across almost every country in the world. The distinction between de jure and de facto regulation is well understood in theory, but almost never implemented in cross-country empirical work because of lack of data. As a result, influential papers like the one by Botero et. al. (2004) published in the Quarterly Journal of Economics, which have shaped the policy debate by finding strong negative consequences of labor regulation on labor market outcomes, are based entirely on measures of de jure stringency of regulations. We show that this neglect of regulation enforcement matters. There is, on average, a negative correlation between the stringency of labor regulation and the intensity of its enforcement. The strong results of Botero et. al. (2004) on the consequences of labor regulation, and the hypotheses of La Porta et. al (2008) on the legal origin theory of regulation stringency, no longer hold for effective labor regulation. 

Author(s): Adams, Zoe, et al.

Journal: International Journal of Comparative Labour Law and Industrial Relations (2017) 

Abstract: Leximetric data coding techniques aim to measure cross-national and inter-temporal variations in the content of legal rules, thereby facilitating statistical analysis of legal systems and their social and economic impacts. In this paper we explain how leximetric methods were used to create the CBR Labour Index (CBR-LRI), an index and related dataset of labour laws from around the world spanning the period from 1970 to 2013. Datasets of this kind must, we suggest, observe certain conventions of transparency and validity if they are to be usable in statistical analysis. The theoretical framework informing the construction of the dataset and the types of questions which it is are designed to answer should be made explicit. Then the choices involved in the selection of indicators, the definition of coding algorithms, and the aggregation and weighting of data to create composite measures, must be spelled out. In addition, primary legal sources should be referenced, and it should be clear how they were used to generate reported values. With these points in mind we provide an overview of the CBR-LRI dataset’s main features and structure, discuss issues of weighting, and present some initial findings on what it reveals of global trends in labour regulation. 

Author(s): Djankov, Simeon, Dorina Georgieva, and Rita Ramalho

Journal: FMG Discussion Paper DP765 (2017) 

Abstract: Using panel data for 189 economies from 2004 to 2016, we show that regulatory reform is associated with periods of fiscal imbalances. This association is significant in advanced economies and in post-communist countries. The presence of IMF programs in developing countries, a consequence of fiscal pressures, encourages regulatory reform. However, the effect of fiscal imbalances on reform weakens when governments can rely on low borrowing costs. Fiscal imbalances spur political change too, though the latter also has a significant independent effect on the proclivity for regulatory reform. 

Author(s): Selwaness, Irène, and Chahir Zaki.

Journal: No. 27. GLO Discussion Paper, 2017 

Abstract: Using a panel of MENA countries, this paper tries to examine the interaction between trade reforms and labor market regulations on the outcome of the labor market. The theoretical predictions of this literature show that the effects of trade liberalization in any given country are conditional on the nature of labor market regulations since trade liberalization is more likely to have a positive impact on employment and wages in countries with flexible labor markets and vice versa. Moreover, more regulated labor markets tend to have higher wages at the expense of sector wide employment. Our main findings show that labor market rigidity reduces the positive impact of trade reform on employment. While this result is stronger for females, it is not for males. 

Author(s): Packard, Truman G.; Montenegro, Claudio E.

Journal: Policy Research Working Paper. WPS8221. (2017) 

Abstract: This paper exploits variation in country-level indicators drawn from published data to analyze the relationship between labor regulation and the use of digital technology. The analysis shows a statistically and economically significant association between digital technology use by firms and a country's statutory minimum wage and employment protection regulations. The results are robust to the inclusion of controls for level of development, economic stability, available infrastructure, and trade openness. To ensure the broadest country coverage, the paper develops new indexes of employment protection, using the World Bank's Doing Business indicators, which allow several aspects of labor market regulation—such as restrictions on hours and hiring, dismissal procedures, and severance costs--to be analyzed separately.