The incentives to invest in job training : do strict labor codes influence this decision?

This paper studies the link between labor market regulations and the incentives of firms to invest in the human capital of their employees. The author's explore a firm level data set across several developing countries and comparethe supply of formal training programs for firms exposed to different degrees of de facto labor regulations. The author's findings show that a more flexible labor code tends to be associated with a smaller investment in job training. However, this effect is small and heterogeneous. Reforms that simultaneously accelerate the diffusion of temporary contracts and increase the protection of permanent workers tend to generate negative effects on the firm's investment in human capital.