a b s t r a c tThis paper studies the effects on registered employment and number of registered establishments of two employment subsidy schemes in Turkey. We implement a difference-in-differences methodology to construct appropriate counterfactuals for the covered provinces. Our findings suggest that both subsidy programs did lead to significant net increases in registered jobs in eligible provinces (5%-13% for the first program and 11%-15% for the second). However, the cost of the actual job creation was high because of substantial deadweight losses, particularly for the first program (47% and 78%). Because of better design features, the second subsidy program had lower, though still significant, deadweight losses (27%-46%). Although constrained by data availability, the evidence suggests that the dominant effect of subsidies was to increase social security registration of firms and workers rather than boosting total employment and economic activity. This supports the theory that in countries with weak enforcement institutions, high labor taxes on low-wage workers may lead to substantial incentives for firms and workers to operate informally.
The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
Labor market regulation is a high-profile, and often contentious, area of public policy. Although these regulations have been studied most extensively in developed countries, there is a growing body of literature on their effects in developing countries. This paper reviews that literature and focuses on the impacts of two important types of labor market regulation, minimum wages and employment protection legislation (EPL), on employment, earnings, and productivity. Strong and opposing views exist regarding the costs and benefits of these regulations, but the results of this review suggest that their impacts are generally smaller than the heat of the debates would suggest. Efficiency effects are found sometimes, but not always, and the effects can be in either direction and are usually modest. The distributional impacts of both minimum wage and employment protection legislation are clearer, with two effects predominating: an equalizing effect among covered workers, but with groups such as youth, women, and the less skilled disproportionately outside the coverage and its benefits. Although the overall conclusion is one of modest effects in most cases, the policy implication is not that these regulations do not matter. On the one hand, both minimum wages and EPL can affect distributional objectives. On the other hand, these regulations can generate undesirable economic or social impacts if they are established or operate in ways that exacerbate the labor market imperfections that they were designed to address. JEL codes: J08, J38, J58, J88 Labor market regulation is a contentious area of public policy debate in many developing countries. To inform this debate, this paper reviews the evidence on the impacts of two important types of labor market regulation: minimum wages and employment protection legislation (EPL). This paper aims to make two contributions to
Thrspaper uses data from a survey of Canadian establishments to consider the effects of computer-based process technological change on wage bargaining power. The analysis finds that union wage differentials for blue-collar warkers as a whole were lower among firms that had introduced process computerization than among those that had not. The relationship between rednological change and the union wage premium differed, however, for skilled and unskilled labour. The union wage effect was lower for skilled workers and higher for general manual occupations in the sub-sample where prQcess computerization had occurred. Explanations for these observed relutionships appear to involve both economic and institutional components.
Labor market regulation is a high-profile, and often contentious, area of public policy. Although these regulations have been studied most extensively in developed countries, there is a growing body of literature on their effects in developing countries. This paper reviews that literature and focuses on the impacts of two important types of labor market regulation, minimum wages and employment protection legislation (EPL), on employment, earnings, and productivity. Strong and opposing views exist regarding the costs and benefits of these regulations, but the results of this review suggest that their impacts are generally smaller than the heat of the debates would suggest. Efficiency effects are found sometimes, but not always, and the effects can be in either direction and are usually modest. The distributional impacts of both minimum wage and employment protection legislation are clearer, with two effects predominating: an equalizing effect among covered workers, but with groups such as youth, women, and the less skilled disproportionately outside the coverage and its benefits. Although the overall conclusion is one of modest effects in most cases, the policy implication is not that these regulations do not matter. On the one hand, both minimum wages and EPL can affect distributional objectives. On the other hand, these regulations can generate undesirable economic or social impacts if they are established or operate in ways that exacerbate the labor market imperfections that they were designed to address. JEL codes: J08, J38, J58, J88 Labor market regulation is a contentious area of public policy debate in many developing countries. To inform this debate, this paper reviews the evidence on the impacts of two important types of labor market regulation: minimum wages and employment protection legislation (EPL). This paper aims to make two contributions to
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