The Efficiency-Equity Trade-off of Labor Market Regulations: Evidence from Brazilian Cities. PRELIMINARY. PLEASE DO NOT CITE (2007)
BibTeX
@MISC{Almeida07theefficiency-equity,
author = {Rita Almeida and World Bank and Pedro Carneiro},
title = {The Efficiency-Equity Trade-off of Labor Market Regulations: Evidence from Brazilian Cities. PRELIMINARY. PLEASE DO NOT CITE},
year = {2007}
}
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Abstract
This paper investigates whether labor market regulations involve a trade-off between efficiency and equity. We use city level data on efficiency and equity outcomes, and we explore the regional variation in the enforcement of labor regulation across 5,513 Brazilian cities. Although not all of the variation in enforcement can be considered exogenous, we control for pre determined regional characteristics and instrument enforcement of regulation with the distance between each city and the location of an enforcement office, a measure of how costly is enforcement of labor regulations. Our findings suggest that a stricter enforcement of labor regulations is associated with a lower city level income inequality and/or poverty rates, although not with significantly lower labor productivity. The evidence also supports that stricter enforcement of labor regulation reduces the use of labor informality at the city level.
Keyphrases
labor market regulation labor regulation brazilian city efficiency-equity trade-off please cite stricter enforcement labor productivity city level income inequality enforcement office labor informality regional characteristic regional variation poverty rate city level data equity outcome city level instrument enforcement
