Rigidities in Employment Protection and Exporting

Şeker, Murat

关键词: ADJUSTMENT PROCESS;    AGGREGATE GROWTH;    AGGREGATE PRODUCTIVITY;    AGGREGATE PRODUCTIVITY GROWTH;    BUSINESS ENVIRONMENT;   

DOI  :  10.1596/1813-9450-5303
RP-ID  :  WPS5303

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

A large number of studies have shownthat contribution of exporters to economic growth anddevelopment is much higher than non-exporting firms. Thisevidence has lead governments to improve their tradepolicies in order to increase foreign exposure of firms.However, improvements in trade policies can only be fullyeffective when they are complemented with other regulatoryreforms that improve the investment climate for firms. Thisstudy focuses on a particular aspect of investment climate,namely employment protection legislation, and shows howthese regulations discourage firms from exporting. Using arich set of firm level data from 26 countries in the EasternEurope and Central Asia region, the author shows that firmsthat cannot create new jobs due to restrictive laborregulations are less likely to export. Evidence shows thatfirms that plan to export expand their size before theystart to export. However the rigidities in labor marketsmake this adjustment costly. Higher costs of labor decreaseoperating profits and lead to a higher threshold value ofproductivity required for entering export markets. As aresult, a smaller fraction of firms chooses to export.