Globalization, Domestic Institutions and Enforcement of Labor Law: Evidence from Latin America

Abstract

This paper provides new measures of government enforcement of labor regulations in Latin America and explores how it is affected by external and domestic factors. Using a panel of presidential terms in 18 Latin American countries between 1985 and 2009, I find that trade openness has a negative effect on inspection resources and activities, and that parties on the left of the political spectrum increase enforcement when they are in power. I also find that FDI penetration has a positive effect on inspection activities, but the relation is more imprecise.