The Effects of Labor Market Regulations on Employment Decisions by Firms

Guillermo Mondino

Edited by Silvia Montoya

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:
The Effects of Labor Market Regulations on Employment Decisions by Firms

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In Argentina, workers have historically enjoyed strong job rights (including a right to advanced layoff notice and to severance payments). During the 1990s, and following the rapid growth in unemployment, these regulations came under attack. This chapter provides some evidence on these issues. It exploits a panel data set that covers over 1,300 manufacturing firms for the period 1990–1996. The panel provides information on employment and hours worked, as well as overtime, wages, and physical production. The next section presents some selected institutional features of Argentina's labor market that focus on job security regulations and payroll taxes. The next section considers two important descriptive issues: Who benefits from regulations, and how much do they cost? The evidence is based on Permanent Household Survey (PHS) microdata and identifies the effects on individuals' labor market outcomes stemming from varying regulations. The firm-level dynamic labor demand estimation is also looked into. The chapter then documents the dynamic responsiveness of employment and hours to changes in output and labor costs at the firm level. The last section concludes.

Keywords: labor market regulation; employment decision; job rights; unemployment; Argentina; labor demand estimation

Chapter.  15851 words.  Illustrated.

Subjects: Company and Commercial Law

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