Working Paper: CEPR ID: DP14277
Authors: Lucas Ronconi; Ravi Kanbur; Santiago López-Cariboni
Abstract: Contrary to the predictions of the insider–outsider model, we show that the large majority of outsiders in developing countries support, rather than oppose, protective labour regulations. This evidence holds across countries in different regions, across different types of protective labour regulations (i.e. severance payment, minimum wages, working time), and for different categories of outsiders (i.e. unemployed workers and employees without access to legally mandated labour benefits). We revise the economic and political assumptions of the insider–outsider model, discussing their empirical relevance in a developing country context.
Keywords: informal labour; segmentation; monopsony; fairness
JEL Codes: J4; J8; O17
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| outsiders' preferences for protective labour regulations (J89) | support for protective labour regulations (J88) |
| employers' economic and political power (J79) | support for protective labour regulations among outsiders (J89) |
| perceived benefits of EPL (J32) | support for protective labour regulations among outsiders (J89) |
| support for protective labour regulations among outsiders (J89) | contradicts insider-outsider model (F22) |