Labor Market Reforms and Their Impact over Formal Labor Demand and Job Market Turnover

Jaime Saavedra and Máximo Torero

in Law and Employment

Published by University of Chicago Press

Published in print October 2004 | ISBN: 9780226322827
Published online March 2013 | e-ISBN: 9780226322858 | DOI:
Labor Market Reforms and Their Impact over Formal Labor Demand and Job Market Turnover

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This chapter analyzes the legal context regarding the probationary period, severance payments, nonwage costs, and temporary contracts, all factors that affect firm and worker behavior. It also describes changes in employment in Metropolitan Lima during the period of analysis and discusses how informality and temporary contracts have been mechanisms through which firms avoid paying mandated benefits and firing costs. The chapter presents results of labor demand estimations at both the sectoral and firm levels. Finally, it analyzes basic patterns of employment duration. In order to assess possible impacts of labor laws, the chapter compares patterns of the self-employed with those of wage earners in the formal and informal sectors. It presents a comparison of job duration among different groups of workers using empirical hazards, and shows the results of exponential hazards functions.

Keywords: labor market reforms; labor demand; market turnover; Peru; worker behavior; severance payments

Chapter.  17702 words.  Illustrated.

Subjects: Company and Commercial Law

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