The Evidence-Based Case for Labour Regulation

Abstract

Analysis of newly available longitudinal data, in the form of time series of legal changes in a range of developed and developing countries, suggests that there is a strong evidence-based case for labour regulation. This new empirical material is being complemented by new theoretical insights into the 'endogenous' or evolved nature of labour law norms. While theory and ideology will continue to frame both the production of empirical data and the application of research findings to policy issues, there are good prospects for informed policy making in the labour regulation field in future.

Application of job security laws, workers’ bargaining power and employment outcomes in India

“…The ‘standard economic analysis of labour law rules’ (Deakin, 2009: 3), which is to say a neoclassical approach, is based on ‘the idea of a self-equilibrating market which corrects itself in response to temporary dislocations’ (Deakin, 2009: 3). In this tradition, ‘wages and employment are set [entirely] by the interaction of supply and demand for labour’ and ‘labour law rules operate as an exogenous intervention in, or interference with, the operation of market forces’ (Deakin, 2009: 2). This interference with market forces leads to coordination failures, retarding economic growth and employment creation (Posner, 1984).…”

Labour and social protection institutions: Recent trends and impact on development

“…According to the other view, the labour market is imperfect and does not function like other markets because "labour is not a commodity". Labour and social protection institutions are essential for making imperfect labour markets function more effi ciently and more equitably, to the benefi t of the society (Deakin, 2011). Th e employment eff ects of these institutions can be positive if they contribute to remedying market failures, and they are particularly helpful in improving the quality of employment for vulnerable groups of workers.…”

“Varieties of minimum wage system” through the dubious lens of indicator‐based rankings

“…One final reservation about the ranking approach is grounded in the findings of the labour law literature which suggest that the relationship between legal indicators and actual outcomes is often uncertain because it is subject to compliance and thus difficult to determine a priori (Deakin, 2011).…”

“…This is certainly understandable, but it does not mean that all quantification should be discouraged. Legal indicators, if developed carefully, could provide a useful snapshot of changes in regulatory frameworks and help to gain valuable insights into how regulatory changes affect actual labour market outcomes (Deakin, 2011). A more pertinent issue is, then, how indicators can be constructed and applied satisfactorily to empirical analysis.…”