The Regulation of Labor and the Relevance of Legal Origin
Abstract
This paper critiques The Regulation of Labor, an empirical study recently published by Juan C. Botero, Simeon Djankov, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer in the Quarterly Journal of Economics. The Regulation of Labor extends these authors' comparative research to the realm of employment, collective-relations, and social-security laws, and finds that legal origin is a stronger predictor of all of these than political or economic variables, with common law associated with the lowest levels of regulation. While these findings are suggestive and help deepen the case for regulatory complementarity, the methodological weaknesses are severe. This paper explores the limits of The Regulation of Labor's dataset and econometric approach, and suggests some implications for the authors' larger project.