Pending Issues in Protection, Productivity Growth, and Poverty Reduction

This paper selectively synthesizes much of the research on Latin American and Caribbean labor markets in recent years. Several themes emerge that are particularly relevant to ongoing policy dialogues. First, labor legislation matters, but markets may be less segmented than previously thought. The im...

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Bibliographic Details
Main Authors:	Arias, Omar, Blom, Andreas, Bosch, Mariano, Cunningham, Wendy, Fiszbein, Ariel, Lopez Acevedo, Gladys, Maloney, William, Saavedra, Jaime, Sanchez-Paramo, Carolina, Santamaria, Mauricio, Siga, Lucas
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACTIVE LABOR ACTIVE LABOR MARKET ACTIVE LABOR MARKET POLICIES ADJUSTMENT PROCESS ADVERSE IMPACTS AGED WORKERS AGGREGATE EMPLOYMENT AVERAGE PRODUCTIVITY CAREERS COLLECTIVE BARGAINING COMPETITIVENESS DECISION MAKING DISCOURAGED WORKERS DISCUSSIONS DISMISSAL DISMISSALS ECONOMIC GROWTH ECONOMIC INSECURITY ECONOMIC SITUATION ECONOMIES OF SCALE ELASTICITY EMPLOYEE EMPLOYMENT CREATION EMPLOYMENT EFFECTS EMPLOYMENT GROWTH EMPLOYMENT PROTECTION LEGISLATION EMPLOYMENT RATE EXPORTS FIRING FIRING COST FIRING COSTS FIRING RESTRICTIONS FIRM LEVEL FOREIGN COMPETITION GDP HIGH UNEMPLOYMENT HIRING HOUSEHOLD INCOME HOUSEHOLD SURVEYS HUMAN CAPITAL HUMAN RESOURCES INCOME DISTRIBUTION INCOME SECURITY INDIGENOUS WORKERS INDUSTRIAL RELATIONS INFLATION RATES INFORMAL EMPLOYMENT INFORMAL LABOR MARKET INFORMAL SECTOR INFORMAL SECTOR WORKERS JOB CREATION JOB DESTRUCTION JOB SEARCH JOB TRAINING JOBLESS GROWTH JOBS LABOR CODES LABOR CONTRACT LABOR FORCE LABOR FORCE PARTICIPATION LABOR LEGISLATION LABOR MARKET LABOR MARKET INDICATORS LABOR MARKET INSTITUTIONS LABOR MARKET OUTCOMES LABOR MARKET POLICY LABOR MARKET RIGIDITIES LABOR MARKETS LABOR ORGANIZATION LABOR PRODUCTIVITY LABOR REGULATION LABOR REGULATIONS LABOR TURNOVER LATIN AMERICAN LONG-TERM UNEMPLOYMENT MARGINAL PRODUCT MEDICAL CARE MINIMUM WAGE MINIMUM WAGES MORAL HAZARD MORTALITY NET EMPLOYMENT NON-WAGE COSTS OPEN ECONOMIES OPPORTUNITY COST POLITICAL ECONOMY PRIMARY SOURCE PRIVATE SERVICES PRODUCTIVITY EFFECTS PRODUCTIVITY GAINS PRODUCTIVITY GROWTH PRODUCTIVITY INCREASES PRODUCTIVITY LEVELS PROTECTING WORKERS REAL WAGES SAFETY NET SAFETY NETS SALARIED EMPLOYMENT SALARIED WORKERS SELF EMPLOYED SELF EMPLOYED WORKERS SELF EMPLOYMENT SEVERANCE PAYMENTS SKILL ACCUMULATION SMALL BUSINESS SOCIAL PROTECTION SOCIAL SECURITY STRUCTURAL UNEMPLOYMENT TEMPORARY JOBS TOTAL COSTS TRADE LIBERALIZATION TRADE REFORMS TRAINING PROGRAMS UNEMPLOYED UNEMPLOYED WORKERS UNEMPLOYMENT COMPENSATION UNEMPLOYMENT DURATION UNEMPLOYMENT INSURANCE UNEMPLOYMENT INSURANCE PROGRAM UNEMPLOYMENT RATE UNEMPLOYMENT RATES UNEMPLOYMENT SPELLS UNIONS UNSKILLED WORKERS WAGE GAINS WAGE GAP WAGE GROWTH WORK IN PROGRESS WORK · MEASUREMENT WORKER WORKERS WORKING YOUNG WORKERS YOUTH UNEMPLOYMENT
Online Access:	http://documents.worldbank.org/curated/en/2005/12/6479817/pending-issues-protection-productivity-growth-poverty-reduction http://hdl.handle.net/10986/8551

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Summary:	This paper selectively synthesizes much of the research on Latin American and Caribbean labor markets in recent years. Several themes emerge that are particularly relevant to ongoing policy dialogues. First, labor legislation matters, but markets may be less segmented than previously thought. The impetus to voluntary informality, which appears to be a substantial fraction of the sector, implies that the design of social safety nets and labor legislation needs to take a more integrated view of the labor market, taking into account the cost-benefit analysis workers and firms make about whether to interact with formal institutions. Second, the impact of labor market institutions on productivity growth has probably been underemphasized. Draconian firing restrictions increase litigation and uncertainty surrounding worker separations, reduce turnover and job creation, and poorly protect workers. But theory and anecdotal evidence also suggest that they, and other related state or union induced rigidities, may have an even greater disincentive effect on technological adoption, which accounts for half of economic growth. Finally, institutions can affect poverty and equity, although the effects seem generally small and channels are not always clear. Overall, the present constellation of labor regulations serves workers and firms poorly and both could benefit from substantial reform.

Pending Issues in Protection, Productivity Growth, and Poverty Reduction

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