Economic Reforms and Labor Markets: Policy Issues and Lessons from Chile

68 Pages Posted: 16 May 2000 Last revised: 29 Nov 2022

See all articles by Sebastian Edwards

Sebastian Edwards

University of California, Los Angeles (UCLA) - Global Economics and Management (GEM) Area; National Bureau of Economic Research (NBER)

Alejandra Cox Edwards

California State University, Long Beach - Department of Economics

Date Written: April 2000

Abstract

This paper deals with the reform to labor market regulation implemented by Chile during the last twenty years. We concentrate on the reform to job security, on the decentralization of the wage bargaining process, and on the reduction in payroll taxes. Our interest is to understand to what extent these reforms helped reduce Chile's rate of unemployment from European' to U.S' levels. We argue that the reduction of payroll taxes (within the context of the social security reform), and the decentralization of bargaining increased labor market flexibility and contributed to the reduction of unemployment. Our analysis suggests that the reform on job security had no significant effect on the aggregate rate of unemployment.

Suggested Citation

Edwards, Sebastian and Cox Edwards, Alejandra, Economic Reforms and Labor Markets: Policy Issues and Lessons from Chile (April 2000). NBER Working Paper No. w7646, Available at SSRN: https://ssrn.com/abstract=228121

Sebastian Edwards (Contact Author)

University of California, Los Angeles (UCLA) - Global Economics and Management (GEM) Area ( email )

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Alejandra Cox Edwards

California State University, Long Beach - Department of Economics ( email )

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