Fear of labor rigidities: The role of expectations on employment growth in Peru

Gustavo Yamada, Pablo Lavado, Gonzalo Rivera

Research output: Contribution to journalArticle in a journalpeer-review


The impact of employment protection legislation has been thoroughly analyzed in varied contexts. Most studies highlight the potential harm of the legislation on labor outcomes, although evidence remains inconclusive. However, the literature has focused primarily on ex post impacts, analyzing the regulation's effect after implementation. This article departs from that analysis to focus on anticipated or ex ante effects of labor regulation. More specifically, we study the role of firms' expectations in future stricter labor legislation related to employment and income in Peru's formal and informal labor market. To account for expectations, we used the number of news items related to the approval of a proposed law - the General Labor Law - to increase labor rigidities in Lima's most important business newspaper. Using the Peruvian labor survey, we find a negative but decreasing relationship between firms' expectations of a future stricter labor market and employment and average income. We also collect evidence that bigger news items and ones closer to the front page have a negative relationship with formal employment and income.

Original languageEnglish
Pages (from-to)875-891
Number of pages17
JournalLatin American Research Review
Issue number4
StatePublished - 2023

Bibliographical note

Publisher Copyright:
© The Author(s), 2023. Published by Cambridge University Press on behalf of the Latin American Studies Association.


  • Expectations
  • Firing cost
  • News
  • Unemployment


Dive into the research topics of 'Fear of labor rigidities: The role of expectations on employment growth in Peru'. Together they form a unique fingerprint.

Cite this