TY - JOUR AU - Djankov,Simeon AU - Porta,Rafael La AU - Lopez-de-Silane,Florencio AU - Shleifer,Andrei AU - Botero,Juan TI - The Regulation of Labor JF - National Bureau of Economic Research Working Paper Series VL - No. 9756 PY - 2003 Y2 - June 2003 DO - 10.3386/w9756 UR - http://www.nber.org/papers/w9756 L1 - http://www.nber.org/papers/w9756.pdf N1 - Author contact info: Simeon Djankov min E-Mail: Simeon_Djankov@hks.harvard.edu Rafael La Porta Dartmouth College Tuck School 210 Tuck Hall Hanover, NH 03755 Tel: 603/646-3739 E-Mail: rafael.laporta@dartmouth.edu Florencio Lopez-de-Silanes EDHEC Business School 393, Promenade des Anglais BP 3116 06202 Nice Cedex 3 France Tel: +33 (0) 4 93 18 78 07 Fax: +33 (0) 4 93 18 78 41 E-Mail: Florencio.lopezdesilanes@edhec.edu Andrei Shleifer Department of Economics Harvard University Littauer Center M-9 Cambridge, MA 02138 Tel: 617/495-5046 Fax: 617/496-1708 E-Mail: ashleifer@harvard.edu M2 - featured in NBER digest on 2004-02-01 AB - We investigate the regulation of labor markets through employment laws, collective bargaining laws, and social security laws in 85 countries. We find that richer countries regulate labor less than poorer countries do, although they have more generous social security systems. The political power of the left is associated with more stringent labor regulations and more generous social security systems. Socialist and French legal origin countries have sharply higher levels of labor regulation than do common law countries, and the inclusion of legal origin wipes out the effect of the political power of the left. Heavier regulation of labor is associated with a larger unofficial economy, lower labor force participation, and higher unemployment, especially of the young. These results are difficult to reconcile with efficiency and political power theories of institutional choice, but are broadly consistent with legal theories, according to which countries have pervasive regulatory styles inherited from the transplantation of legal systems. ER -