Enforcement Capacity and the Impact of Labor Regulation : Evidence from the Russian Federation

Gonzalez, Alvaro ; Sharma, Siddharth ; Subhash, Hari

World Bank, Washington, DC

关键词: firms;    labor policies;    enforcement;    employment adjustment;    labor market;   

DOI  :  10.1596/1813-9450-7888
RP-ID  :  WPS7888

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The impact of business regulations onfirms could depend on how the regulations are enforced inpractice. Exploiting variation in enforcement capacityacross the Russian Federation's administrative regions,this paper examines whether the enforcement of restrictiveregulations on hiring and firing workers affects how firmsadjust employment during industry upswings and downswings.The analysis finds that the extent to which firms adjustemployment upward during industry upswings and downwardduring downswings is smaller in regions with strongerenforcement capacity (or stricter de facto employmentprotection). The effect of enforcement is sizable: forexample, increasing enforcement capacity from the 25th tothe 75th percentile dampens employment adjustment in adownswing by 34 percent. Thus, although restrictiveregulation on hiring and firing reduces the ability of firmsto adjust employment, the extent to which it does so dependson enforcement.