Arias, OmarBlom, AndreasBosch, MarianoCunningham, WendyFiszbein, ArielLopez Acevedo, GladysMaloney, WilliamSaavedra, JaimeSanchez-Paramo, CarolinaSantamaria, MauricioSiga, LucasArias, Omar2012-06-202012-06-202005-12https://hdl.handle.net/10986/8551This paper selectively synthesizes much of the research on Latin American and Caribbean labor markets in recent years. Several themes emerge that are particularly relevant to ongoing policy dialogues. First, labor legislation matters, but markets may be less segmented than previously thought. The impetus to voluntary informality, which appears to be a substantial fraction of the sector, implies that the design of social safety nets and labor legislation needs to take a more integrated view of the labor market, taking into account the cost-benefit analysis workers and firms make about whether to interact with formal institutions. Second, the impact of labor market institutions on productivity growth has probably been underemphasized. Draconian firing restrictions increase litigation and uncertainty surrounding worker separations, reduce turnover and job creation, and poorly protect workers. But theory and anecdotal evidence also suggest that they, and other related state or union induced rigidities, may have an even greater disincentive effect on technological adoption, which accounts for half of economic growth. Finally, institutions can affect poverty and equity, although the effects seem generally small and channels are not always clear. Overall, the present constellation of labor regulations serves workers and firms poorly and both could benefit from substantial reform.CC BY 3.0 IGOACTIVE LABORACTIVE LABOR MARKETACTIVE LABOR MARKET POLICIESADJUSTMENT PROCESSADVERSE IMPACTSAGED WORKERSAGGREGATE EMPLOYMENTAVERAGE PRODUCTIVITYCAREERSCOLLECTIVE BARGAININGCOMPETITIVENESSDECISION MAKINGDISCOURAGED WORKERSDISCUSSIONSDISMISSALDISMISSALSECONOMIC GROWTHECONOMIC INSECURITYECONOMIC SITUATIONECONOMIES OF SCALEELASTICITYEMPLOYEEEMPLOYMENT CREATIONEMPLOYMENT EFFECTSEMPLOYMENT GROWTHEMPLOYMENT PROTECTION LEGISLATIONEMPLOYMENT RATEEXPORTSFIRINGFIRING COSTFIRING COSTSFIRING RESTRICTIONSFIRM LEVELFOREIGN COMPETITIONGDPHIGH UNEMPLOYMENTHIRINGHOUSEHOLD INCOMEHOUSEHOLD SURVEYSHUMAN CAPITALHUMAN RESOURCESINCOME DISTRIBUTIONINCOME SECURITYINDIGENOUS WORKERSINDUSTRIAL RELATIONSINFLATION RATESINFORMAL EMPLOYMENTINFORMAL LABOR MARKETINFORMAL SECTORINFORMAL SECTOR WORKERSJOB CREATIONJOB DESTRUCTIONJOB SEARCHJOB TRAININGJOBLESS GROWTHJOBSLABOR CODESLABOR CONTRACTLABOR FORCELABOR FORCE PARTICIPATIONLABOR LEGISLATIONLABOR MARKETLABOR MARKET INDICATORSLABOR MARKET INSTITUTIONSLABOR MARKET OUTCOMESLABOR MARKET POLICYLABOR MARKET RIGIDITIESLABOR MARKETSLABOR ORGANIZATIONLABOR PRODUCTIVITYLABOR REGULATIONLABOR REGULATIONSLABOR TURNOVERLATIN AMERICANLONG-TERM UNEMPLOYMENTMARGINAL PRODUCTMEDICAL CAREMINIMUM WAGEMINIMUM WAGESMORAL HAZARDMORTALITYNET EMPLOYMENTNON-WAGE COSTSOPEN ECONOMIESOPPORTUNITY COSTPOLITICAL ECONOMYPRIMARY SOURCEPRIVATE SERVICESPRODUCTIVITY EFFECTSPRODUCTIVITY GAINSPRODUCTIVITY GROWTHPRODUCTIVITY INCREASESPRODUCTIVITY LEVELSPROTECTING WORKERSREAL WAGESSAFETY NETSAFETY NETSSALARIED EMPLOYMENTSALARIED WORKERSSELF EMPLOYEDSELF EMPLOYED WORKERSSELF EMPLOYMENTSEVERANCE PAYMENTSSKILL ACCUMULATIONSMALL BUSINESSSOCIAL PROTECTIONSOCIAL SECURITYSTRUCTURAL UNEMPLOYMENTTEMPORARY JOBSTOTAL COSTSTRADE LIBERALIZATIONTRADE REFORMSTRAINING PROGRAMSUNEMPLOYEDUNEMPLOYED WORKERSUNEMPLOYMENT COMPENSATIONUNEMPLOYMENT DURATIONUNEMPLOYMENT INSURANCEUNEMPLOYMENT INSURANCE PROGRAMUNEMPLOYMENT RATEUNEMPLOYMENT RATESUNEMPLOYMENT SPELLSUNIONSUNSKILLED WORKERSWAGE GAINSWAGE GAPWAGE GROWTHWORK IN PROGRESSWORK · MEASUREMENTWORKERWORKERSWORKINGYOUNG WORKERSYOUTH UNEMPLOYMENTWorld Bank10.1596/1813-9450-3799