Enforcement Capacity and the Impact of Labor Regulation : Evidence from the Russian Federation
The impact of business regulations on firms could depend on how the regulations are enforced in practice. Exploiting variation in enforcement capacity across the Russian Federation's administrative regions, this paper examines whether the enfo...
| Main Authors: | , , |
|---|---|
| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/442851479132835481/Enforcement-capacity-and-the-impact-of-labor-regulation-evidence-from-the-Russian-Federation http://hdl.handle.net/10986/25690 |
| Summary: | The impact of business regulations on
firms could depend on how the regulations are enforced in
practice. Exploiting variation in enforcement capacity
across the Russian Federation's administrative regions,
this paper examines whether the enforcement of restrictive
regulations on hiring and firing workers affects how firms
adjust employment during industry upswings and downswings.
The analysis finds that the extent to which firms adjust
employment upward during industry upswings and downward
during downswings is smaller in regions with stronger
enforcement capacity (or stricter de facto employment
protection). The effect of enforcement is sizable: for
example, increasing enforcement capacity from the 25th to
the 75th percentile dampens employment adjustment in a
downswing by 34 percent. Thus, although restrictive
regulation on hiring and firing reduces the ability of firms
to adjust employment, the extent to which it does so depends
on enforcement. |
|---|