This paper presents evidence that legal protection of property rights is indeed
an important contributor to economic success but that institutional and legal
protection of the rights of labor is also associated with economic success, particularly
in developing countries. Cross-country analyses show that measures
of labor protections have the same relation to economic efficiency, measured by
GDP per capita, as measures of protection of property, and that both protection
of property rights and protection of labor rights reduce economic inequality.
The results suggest that as legal protection of property gives investors the right
message about economic activity: invest in productive undertakings and you
will gain the fruits of your investments; legal protection of labor gives workers
the right message about economic activity: work and you will gain the fruits of
your labor.
Freeman, R. (2016). Labor market institutions and employment policies: the international experience. Estudios De Economía, 30(1), pp. 5–20. Retrieved from https://estudiosdeeconomia.uchile.cl/index.php/EDE/article/view/40845
