DP14277 Who demands labour (de)regulation in the developing world? Insiderâ??outsider theory revisited

Author(s): Ravi Kanbur, Santiago LĂłpez-Cariboni, Lucas Ronconi
Publication Date: January 2020
Keyword(s): Fairness, informal, Labour, monopsony, Segmentation
JEL(s): J4, J8, O17
Programme Areas: Labour Economics, Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14277

Contrary to the predictions of the insiderâ??outsider model, we show that the large majority of outsiders in developing countries support, rather than oppose, protective labour regulations. This evidence holds across countries in different regions, across different types of protective labour regulations (i.e. severance payment, minimum wages, working time), and for different categories of outsiders (i.e. unemployed workers and employees without access to legally mandated labour benefits). We revise the economic and political assumptions of the insiderâ??outsider model, discussing their empirical relevance in a developing country context.