The unemployment effects of labor regulation around the world

Using data on 73 economies for the years 2000 to 2003, this paper empirically analyzes the effects of labor regulation on unemployment around the globe. According to the regression results, stricter regulation generally appears to increase unemployment. Tight hiring and firing rules and military conscription most clearly seem to have adverse effects. More centralized collective bargaining seems to increase female unemployment. The size of most effects appears to be substantial, particularly among young people. However, we do not find statistically significant effects of minimum wages or unemployment benefits. Our results are robust to variations in specification. Journal of Comparative Economics 37 (1) (2009) 76-90. Department of Economics & International Development, University of Bath, Bath BA2 7AY, United Kingdom. (C) 2008 Association for Comparative Economic Studies. Published by Elsevier Inc. All rights reserved.