Institutional Enforcement, Labor-Market Rigidities, and Economic Performance

25 Pages Posted: 25 Apr 2011

See all articles by César A. Calderón

César A. Calderón

Central Bank of Chile

Alberto Chong

University of Ottawa

Gianmarco León-Ciliotta

Universitat Pompeu Fabra and Barcelona GSE; Barcelona Graduate School of Economics (Barcelona GSE); Institute for Political Economy and Governance, Barcelona; CEPR

Date Written: October 2006

Abstract

This paperstudy the issue of institutional enforcement of regulations by focusing on labor-market policies and their potential link to economic performance. It test the different impacts of enforceable and non-enforceable labor regulations by proxying non-enforceable labor rigidity measures using data on conventions from the International Labor Organization (ILO). It has been argued that non-enforceable conventions -that is, those that exist on paper and are simply de jure regulations -appear to be more distortionary and tend to be the least enforced in practice (Squire and Suthiwart-Narueput, 1997). According to Freeman (1993), these conventions reflect the ideal regulatory framework from an institutionalist perspective and cover a variety of labor market issues, from child labor to placement agencies. Whereas in theory, a country`s ratification of ILO conventions gives the country legal status and thus supersedes domestic regulations relating to those issues, in practice the degree of labor-market rigidity depends on how the conventions are enforced. It is the outcome of the regulations that matters, rather than their number.

Suggested Citation

Calderon, Cesar A. and Chong, Alberto and León-Ciliotta, Gianmarco, Institutional Enforcement, Labor-Market Rigidities, and Economic Performance (October 2006). IDB Working Paper No. 492, Available at SSRN: https://ssrn.com/abstract=1820065 or http://dx.doi.org/10.2139/ssrn.1820065

Cesar A. Calderon (Contact Author)

Central Bank of Chile ( email )

Agustinas 1180
Santiago
Chile

Alberto Chong

University of Ottawa ( email )

2292 Edwin Crescent
Ottawa, Ontario K2C 1H7
Canada

Gianmarco León-Ciliotta

Universitat Pompeu Fabra and Barcelona GSE ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
(+34) 93 542-1757 (Phone)
(+34) 93 542-1746 (Fax)

HOME PAGE: http://https://sites.google.com/site/gianmarcoleon/

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas 25-27
Barcelona, Catalonia 08014
Spain

Institute for Political Economy and Governance, Barcelona ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

CEPR ( email )

London
United Kingdom

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