Legal Origins, Labor Regulations, and Labor Market Outcomes

Estephane, Pauline Fady and Haidar, Jamal Ibrahim (2025): Legal Origins, Labor Regulations, and Labor Market Outcomes. Published in: Labor History (2025): pp. 1-36.

Abstract

Using data from 50 economies, we re-examine the role of legal origins in shaping labor regulations and explore the consequences of these regulations on labor market outcomes. We find that civil law countries tend to adopt more protective labor regulations while common law countries emphasize flexible employment regulations. We document that de jure protective labor regulations create barriers to labor market entry while de facto flexible employment regulations have adverse informal employment and labor productivity consequences. Our results suggest that flexible employment regulations without adequate labor protection laws can encourage labor exploitation, reduce labor productivity, and are insufficient to draw firms and workers into the formal sector.

• Item Type: MPRA Paper
• Language: English
• Keywords: legal origins; labor regulations; labor market outcomes; informal economy; productivity; B-READY
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E26 - Informal Economy ; Underground Economy; J - Labor and Demographic Economics > J4 - Particular Labor Markets > J41 - Labor Contracts; J - Labor and Demographic Economics > J4 - Particular Labor Markets > J46 - Informal Labor Markets; J - Labor and Demographic Economics > J5 - Labor-Management Relations, Trade Unions, and Collective Bargaining > J52 - Dispute Resolution: Strikes, Arbitration, and Mediation ; Collective Bargaining; J - Labor and Demographic Economics > J8 - Labor Standards: National and International > J83 - Workers' Rights; K - Law and Economics > K1 - Basic Areas of Law; K - Law and Economics > K1 - Basic Areas of Law > K10 - General; K - Law and Economics > K3 - Other Substantive Areas of Law

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