Labor Market "Rigidity" and the Success of Economic Reforms across More than 100 Countries

Forteza, Alvaro ; Rama, Martin

World Bank, Washington, DC

关键词: ADJUSTMENT COSTS;    ADJUSTMENT LENDING;    ADJUSTMENT POLICIES;    ADJUSTMENT PROCESS;    ADJUSTMENT PROGRAMS;   

DOI  :  10.1596/1813-9450-2521
RP-ID  :  WPS2521

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 authors show that labor marketpolicies and institutions affect the effectiveness ofeconomic reform programs. They compare annual growth ratesacross 119 countries, using data from 449 World Bankadjustment credits and loans between 1980 and 1996. Theresults indicate that countries with relatively rigid labormarkets experienced deeper recessions before adjustment andslower recoveries afterward. The results also disentanglethe mechanisms through which labor market rigidity operates.They find that minimum wages and mandatory benefits do nothurt growth. But the relative size of organized labor (ingovernment and elsewhere) appears to matter. Labor marketrigidity seems to be relevant more for political reasonsthan for economic reasons. The authors' findingssuggest that not enough attention has been paid to vocalgroups (urban, middle-class groups) that stand to lose fromeconomic reform. The implications of the findings forpolicymakers: There should be less focus on deregulating thelabor market and more on defusing the opposition of (vocal)losers. The results are robust to changes in measurement,controls, and sample, and do not suffer from self-selection bias.