IDEAS home Printed from https://ideas.repec.org/p/ris/adbewp/0361.html
   My bibliography  Save this paper

Globalization, Labor Market Regulation, and Firm Behavior

Author

Listed:
  • Meyer, Moritz

    (World Bank)

  • Vandenberg, Paul

    (Asian Development Bank)

Abstract

The paper analyzes the link between firm characteristics and labor market regulation in five Asian economies—Bangladesh, Indonesia, Pakistan, the Philippines, and Viet Nam. Labor market policies and labor standards do not only affects workers, but also influence firms’ investment and employment decisions. The empirical analysis uses information from enterprise surveys. Empirical results describe systematic differences in the perceived level of labor market regulation. Controlling for a wide set of firm characteristics, the perceived level of labor market regulation is found to vary between firms that participate in global trade as against those supplying the domestic market. The in-country location of a firm is also a significant determinant. The level of labor intensity explains variation in the reported level of labor market regulation between firms. Findings support a better understanding of the types of firms that find labor market regulation to be an obstacle to their operations, and can be used to design targeted policy interventions.

Suggested Citation

  • Meyer, Moritz & Vandenberg, Paul, 2013. "Globalization, Labor Market Regulation, and Firm Behavior," ADB Economics Working Paper Series 361, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0361
    Note: http://www.adb.org/sites/default/files/pub/2013/ewp-361.pdf
    as

    Download full text from publisher

    File URL: https://www.adb.org/publications/globalization-labor-market-regulation-and-firm-behavior
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Philippe Aghion & Robin Burgess & Stephen J. Redding & Fabrizio Zilibotti, 2008. "The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India," American Economic Review, American Economic Association, vol. 98(4), pages 1397-1412, September.
    2. Juan C. Botero & Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "The Regulation of Labor," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(4), pages 1339-1382.
    3. André Stel & David Storey & A. Thurik, 2007. "The Effect of Business Regulations on Nascent and Young Business Entrepreneurship," Small Business Economics, Springer, vol. 28(2), pages 171-186, March.
    4. Frank Stephen & David Urbano & Stefan Hemmen, 2009. "The responsiveness of entrepreneurs to working time regulations," Small Business Economics, Springer, vol. 32(3), pages 259-276, March.
    5. Edward P. Lazear, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(3), pages 699-726.
    6. Djankov, Simeon & Ramalho, Rita, 2009. "Employment laws in developing countries," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 3-13, March.
    7. Baccaro, Lucio & Rei, Diego, 2007. "Institutional Determinants of Unemployment in OECD Countries: Does the Deregulatory View Hold Water?," International Organization, Cambridge University Press, vol. 61(3), pages 527-569, July.
    8. Almeida, Rita & Carneiro, Pedro, 2009. "Enforcement of labor regulation and firm size," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 28-46, March.
    9. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, April.
    10. Paul VANDENBERG, 2010. "Is Asia adopting flexicurity?," International Labour Review, International Labour Organization, vol. 149(1), pages 31-58, March.
    11. Rana Hasan & Devashish Mitra & K.V. Ramaswamy, 2007. "Trade Reforms, Labor Regulations, and Labor-Demand Elasticities: Empirical Evidence from India," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 466-481, August.
    12. Timothy Besley & Robin Burgess, 2004. "Can Labor Regulation Hinder Economic Performance? Evidence from India," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 91-134.
    13. Poschke, Markus, 2009. "Employment protection, firm selection, and growth," Journal of Monetary Economics, Elsevier, vol. 56(8), pages 1074-1085, November.
    14. Dutta Roy, Sudipta, 2004. "Employment dynamics in Indian industry: adjustment lags and the impact of job security regulations," Journal of Development Economics, Elsevier, vol. 73(1), pages 233-256, February.
    15. Freund, Caroline & Bolaky, Bineswaree, 2008. "Trade, regulations, and income," Journal of Development Economics, Elsevier, vol. 87(2), pages 309-321, October.
    16. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, April.
    17. Bagliano, Fabio-Cesare & Bertola, Giuseppe, 2007. "Models for Dynamic Macroeconomics," OUP Catalogue, Oxford University Press, number 9780199228324.
    18. Pedro Portugal & Olivier Blanchard, 2001. "What Hides Behind an Unemployment Rate: Comparing Portuguese and U.S. Labor Markets," American Economic Review, American Economic Association, vol. 91(1), pages 187-207, March.
    19. Feldmann, Horst, 2009. "The unemployment effects of labor regulation around the world," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 76-90, March.
    20. Pierre Cahuc & André Zylberberg, 2004. "Labor Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 026203316x, April.
    21. Di Tella, Rafael & MacCulloch, Robert, 2005. "The consequences of labor market flexibility: Panel evidence based on survey data," European Economic Review, Elsevier, vol. 49(5), pages 1225-1259, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ali Fakih & Pascal L. Ghazalian, 2015. "What factors influence firm perceptions of labour market constraints to growth in the MENA region?," International Journal of Manpower, Emerald Group Publishing Limited, vol. 36(8), pages 1181-1206, November.
    2. Chengde You & Huishan Qiu & Zhuojie Pi & Mengyuan Yu, 2023. "Sustainable Enterprise Development in the Manufacturing Sector: Flexible Employment and Innovation in China," Sustainability, MDPI, vol. 15(10), pages 1-30, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Djankov, Simeon & Ramalho, Rita, 2009. "Employment laws in developing countries," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 3-13, March.
    2. Dragos Adascalitei & Sameer Khatiwada & Miguel Á. Malo & Pignatti Moran, 2015. "Employment protection and collective bargaining during the great recession: a comprehensive review of international evidence," Revista de Economía Laboral - Spanish Journal of Labour Economics, Asociación Española de Economía Laboral - AEET, vol. 12, pages 50-87.
    3. Almeida, Rita K. & Poole, Jennifer P., 2017. "Trade and labor reallocation with heterogeneous enforcement of labor regulations," Journal of Development Economics, Elsevier, vol. 126(C), pages 154-166.
    4. Almeida, Rita & Carneiro, Pedro, 2009. "Enforcement of labor regulation and firm size," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 28-46, March.
    5. MacLeod, W. Bentley, 2011. "Great Expectations: Law, Employment Contracts, and Labor Market Performance," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 18, pages 1591-1696, Elsevier.
    6. Shanthi Nataraj & Francisco Perez-Arce & Krishna B. Kumar & Sinduja V. Srinivasan, 2014. "The Impact Of Labor Market Regulation On Employment In Low-Income Countries: A Meta-Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 551-572, July.
    7. Romain Duval & Prakash Loungani, 2021. "Designing Labor Market Institutions in Emerging Market and Developing Economies: A Review of Evidence and IMF Policy Advice," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 63(1), pages 31-83, March.
    8. Amrit Amirapu & Michael Gechter, 2020. "Labor Regulations and the Cost of Corruption: Evidence from the Indian Firm Size Distribution," The Review of Economics and Statistics, MIT Press, vol. 102(1), pages 34-48, March.
    9. Selçuk GÜL, 2013. "Institutional Rigidities and Their Effects on Labor Demand in Turkey," Sosyoekonomi Journal, Sosyoekonomi Society, issue 20(20).
    10. Parsons, Donald O., 2011. "Mandated Severance Pay and Firing Cost Distortions: A Critical Review of the Evidence," IZA Discussion Papers 5776, Institute of Labor Economics (IZA).
    11. Betcherman, Gordon, 2014. "Labor market regulations : what do we know about their impacts in developing countries ?," Policy Research Working Paper Series 6819, The World Bank.
    12. Hasan, Rana & Mehta, Aashish & Sundaram, Asha, 2021. "The effects of labor regulation on firms and exports: Evidence from Indian apparel manufacturing," Journal of Comparative Economics, Elsevier, vol. 49(1), pages 183-200.
    13. Ahsan, Ahmad & Pagés, Carmen, 2009. "Are all labor regulations equal? Evidence from Indian manufacturing," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 62-75, March.
    14. Azizjon Alimov, 2015. "Labor Protection Laws and Bank Loan Contracting," Journal of Law and Economics, University of Chicago Press, vol. 58(1), pages 37-74.
    15. Simontini Das, 2018. "Does Casualization Increase the Job Opportunity to the Workers or Impoverish Them? An Evidence from Indian-Organized Manufacturing Sector," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 19(1), pages 86-107, March.
    16. Jackline Wahba & Ragui Assaad, 2017. "Flexible Labor Regulations and Informality in Egypt," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 962-984, November.
    17. Chaurey, Ritam, 2015. "Labor regulations and contract labor use: Evidence from Indian firms," Journal of Development Economics, Elsevier, vol. 114(C), pages 224-232.
    18. Arup Mitra & Chandan Sharma, 2014. "Technology Intensity and Global Competitiveness: Issues in Labour Cost and Employment," Working Papers id:6217, eSocialSciences.
    19. Feldmann, Horst, 2009. "The unemployment effects of labor regulation around the world," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 76-90, March.
    20. Kuddo, Arvo, 2009. "Labor laws in Eastern European and Central Asian countries : minimum norms and practices," Social Protection Discussion Papers and Notes 51698, The World Bank.

    More about this item

    Keywords

    labor market institutions (regulation); trade and labor markets; developing countries;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:adbewp:0361. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Orlee Velarde (email available below). General contact details of provider: https://edirc.repec.org/data/eradbph.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.