Working Paper: NBER ID: w10129
Authors: James Heckman; Carmen Pags
Abstract: This paper summarizes the main lessons learned from Law and Employment: Lessons from Latin America and the Caribbean, a forthcoming NBER book. It places Latin American economies and economic policies in a world context. The paper quantifies the cost of regulation in Latin America and OECD Europe and discusses the origin of regulation. It shows the fragility of time series data analyses of the sort widely used to analyze the impact of regulation in OECD Europe and the benefits of using microdata data. The evidence shows that regulation reduces labor market flexibility, reduces the employment of marginal workers and generates inequality in the larger society.
Keywords: Labor Market Regulations; Employment; Latin America; Inequality; Microdata
JEL Codes: K31; L50
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Regulation (L51) | Labor market flexibility (J48) |
| Labor market flexibility (J48) | Employment rates (J68) |
| Regulation (L51) | Employment rates (J68) |
| Mandated benefits (J32) | Employment of marginal workers (J69) |