Employment Regulations Through the Eyes of Employers: Do They Matter and How Do Firms Respond to Them?

By Gaëlle Pierre, S. Scarpetta. Social Science Research Network, 2004

113 citations recorded by the source corpus.

The authors present evidence on how employers perceive labor regulations and react when these are perceived to constrain the operation of their firm. They draw from harmonized surveys of (up to) 17,000 firms around the world and compare employers' responses with actual labor legislation. The authors find that employers' concerns about labor regulations are closely matched by the relative stringency of de jure labor laws. Countries that have, from an international perspective, tight labor regulations tend to have higher proportions of employers reporting these regulations as severe constraints. But not all firms are affected in the same way by onerous labor regulations. Medium sized firms are those whose business and prospects for growth are most negatively affected. Similarly, innovating firms are disproportionally affected by tight labor regulations. There is also clear evidence in the data that firms facing tight regulations invest more in training and make greater use of temporary employment. Small firms mainly rely on temporary employment, while medium and large firms, as well as innovating firms, tend to rely more on on-the-job training if labor regulations make hiring and firing very costly.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/87e0eb3512d67b5c8c1b3d5d18e8b7fc962840da

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

Citations in the corpus

Explaining Enterprise Performance in Developing Countries with Business Climate Survey Data (2008, background): “Pierre and Scarpetta (2004) use 38 countries and confirm that countries with more restrictive labor regulations are associated with higher shares of firms reporting labor regulations as constraining’32 However, even if objective and subjective measures are significantly correlated, it is important…”
A Burden on Business? Reviewing the Evidence Base on Regulation and Small-Business Performance (2006, background): “Pierre and Scarpetta (2004), using survey data from 17000 firms in eighty-one countries, report that small firms (with fewer than 20 employees) were more likely to rely on temporary employment to circumvent the costs associated with strict labour regulations than were medium-sized firms (with 21 ^…”
Job Security and Job Protection (2005, unknown): “Further, Pierre and Scarpetta (2004) use international survey data on 17000 firms to show that employers’ concerns about regulations are closely correlated with the Laws’ de jure stringency.”
Setting It Right: Employment Protection, Labour Reallocation and Productivity (2011, background): “At the same time, it should be stressed that some degree of job protection, by promoting job stability, may encourage work commitment and investment in firm-specific human capital (see e.g. Akerlof 1984; Soskice 1997; Belot et al. 2007; Pierre and Scarpetta 2004; Acharya et al. 2010).”