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

This paper provides new measures of government enforcement of labor regulations in eighteen Latin American countries between 1985 and 2009, and explores how it is affected by external and domestic factors. The results suggest that governments react to the competitive pressures produced by trade opening by turning a blind eye to noncompliance, but increase enforcement in response to higher FDI. Governments also react to the demands of their constituent base to keep their support and reinforce partisan affinities, and workers are more effective in more democratic systems.