Labor Market Regulation and the Legal System
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Philipps-Universität Marburg
Abstract
When enacting labor market regulation governments face courts
that interpret and implement the legal code. We show that the incentives
for governments for labor market reform increase with the uncertainty
that is involved in the implementation of legal codes through
courts. Given that judges have more discretion in common as opposed
to civil law systems more reform activity as a response to crises should
be observed in the former system. This �nding is backed by evidence
from a panel of OECD countries.
Keywords
labor courts, unemployment, labor market regulation, uncertainty