Institutional enforcement, labor-market rigidities, and economic performance

Cesar Calderon, Alberto Chong, Gianmarco Leon

Research output: Contribution to journalArticle in a journalpeer-review

7 Scopus citations

Abstract

This paper compares non-enforceable and enforceable measures of labor rigidities as a measure of the quality of labor institutions, and tests whether such labor rigidities are conducive to long-run growth. We find that non-enforceable labor regulations do not have a bearing on economic growth, but enforceable labor regulations do. In fact, when using a GMM-IV method for a panel data of countries during the period 1970-2000 that accounts for weak endogeneity, we find that such a link is negative and statistically significant. It appears that labor rigidities are thus negatively linked with long-run economic growth.
Original languageEnglish
Pages (from-to)38-49
Number of pages12
JournalEmerging Markets Review
Volume8
Issue number1
DOIs
StatePublished - 1 Mar 2007
Externally publishedYes

Keywords

  • Enforcement
  • GMM-IV
  • Growth
  • Institutions
  • Labor rigidities

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