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The political economy of labor market liberalization

  • Author(s): Choung, Jinhee Lee
  • et al.
Abstract

This dissertation examines the role of policy tradeoffs in labor market liberalization. Countries with a rigid labor market and restrictive employment protection laws can raise the likelihood of liberalization by offering unemployment insurance as an alternative means of labor protection. Contrary to prevailing assumptions, employers are supportive of social welfare policies when doing so would help achieve a more flexible labor market--defined by the ease of hiring and firing--by ameliorating labor opposition through policy compensation. Moreover, the likelihood of labor market liberalization rises in times of labor weakness and waning power. Heightened market competition generated through increased economic openness, economic downturns, and financial crises negatively affect labor's bargaining power. On the other hand, democratization that enhances labor mobilization, protectionist policies that limit market competition, and favorable economic conditions that increase national wealth, all strengthen labor's bargaining power and thus its ability to resist liberalization. Thus, this dissertation examines the recent changes in employment protection laws in a sample of 84 countries in the world through a quantitative analysis (Chapter 2); in the middle -income countries in East Asia through a comparative case study (Chapter 3); and in the Republic of Korea through an in-depth historical-institutional case study (Chapter 4). The results of this empirical investigation provide strong support for the proposed theory

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