Labor%20Market%20Regulations%20and%20Income%20Inequality%3A%20Evidence%20for%20a%20Panel%20of%20Countries

Working Papers

Labor Market Regulations and Income Inequality: Evidence for a Panel of Countries


CODE: WP-514
AUTHOR(s): Calderón, César , Chong, Alberto , Valdés, Rodrigo
PUBLISHED: October 2004
LANGUAGE: English
RELATED TOPICS: Poverty Reduction and Labor
DOWNLOAD FILE IN: English

Abstract:

This paper presents evidence on the impact of labor regulations on income inequality using two recently published databases on labor institutions and outcomes (Rama and Artecona, 2002; Botero, Djankov, La Porta, López-de-Silanes and Shleifer, 2003) and different cross-section and panel data analysis techniques for a sample of 121 countries over the 1970-2000 period. When we consider the techniques most likely to be robust, we find that: (i) de jure regulations do not improve income distribution; (ii) relative compliance with existing regulations improves income distribution; (iii) de facto regulations are weakly associated with improving income inequality. This result partly reflects the fact that regulations are endogenous and, more interestingly, different regulations have quite distinct effects. In particular, we find that any redistributive effect of labor regulations may come from trade union membership, public employment and mandated benefits (proxied by maternity leave).

Related Research by JEL Codes:
(or click here to find research by JEL Codes)
  • Learning Better: Public Policy for Skills Development
    Books
    IDB-BK-171 - August 2017

    Despite governments’ best efforts, many people in Latin America and the Caribbean don’t have the skills they need to thrive. This book looks at what policies work, and don’t work, so that governments can help people learn better and realize their potential throughout their lifetimes. (View publication)

  • Ageing Poorly? Accounting for the Decline in Earnings Inequality in Brazil, 1995-2012
    Working Papers
    IDB-WP-792 - March 2017

    The Gini coefficient of labor earnings in Brazil fell by nearly a fifth between 1995 and 2012, from 0.50 to 0.41. The decline in earnings inequality was even larger by other measures, with the 90-10 percentile ratio falling by almost 40 percent. Although the conventional explanation of a falling education premium did play a role, an RIF regression-based decomposition analysis suggests that the dec ... (View publication)

  • Finance and Employment Formalization: Evidence from Mexico's Income-Expenditure Surveys, 2000-2010
    Working Papers
    IDB-WP-324 - April 2014

    This paper studies the relationship between financial slack and employment formalization by exploiting heterogeneity in industry-level financial dependence in the spirit of Rajan and Zingales (1998). Heterogeneity along with time-series variation in aggregate credit are used to determine industry-level financial slack and measure its relationship to employment formality. Also presented are two bas ... (View publication)

Hello, Welcome to the IDB!

Please join our mailing list by simply entering your email below.