Labour Law and Inclusive Development: The Economic Effects of Industrial Relations Laws in Middle-Income Countries

Abstract

We use leximetric data coding techniques and panel data econometrics to test for the economic effects of laws governing worker representation and industrial action in the large middle-income countries of Brazil, China, India, Russia and South Africa. We find that more worker-protective laws on employee representation tend to be correlated with higher scores on the Human Development Index. By contrast, in the case of laws on industrial action, some negative effects on human development indicators are reported. Our findings imply that laws supporting employee voice and collective bargaining may have beneficial social effects in middle-income countries. We find very little evidence of disemployment effects due to more protective labour laws.