Labor Markets in Latin America: Combining Social Protection With Market Flexibility
Sebastian Edwards, Nora Lustig, Brookings InstitutionISBN: 0815721072;
Many of the rules that govern labor markets in Latin America (and elsewhere) raise labor costs, create barriers to entry, and introduce rigidities in the employment structure. These include the exceedingly restrictive regulations on hiring and firing practices, as well as burdensome social insurance schemes. Such labor market regulations contribute to an over-expansion of precarious forms of employment and to rural poverty, and hinder countries from responding rapidly to new challenges from increased foreign competition. At the same time, other norms can reduce costs and raise productivity; they should be kept in place and their enforcement improved. For example, some occupational health and safety standards lower medical costs and savelives. One may also want to keep legislation aimed at providing a minimum social insurance for unemployment, old age, sickness, and disabilities. In practice, the most common decision that governments confront is not whether...
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