Labor market policies and institutions affect the success of economic reform but probably more for political than for economic reasons. Growth appears not to be hurt by minimum wages and mandatory benefits. But the relative size of organized labor (in government and elsewhere) is crucial

Labor market policies and institutions affect the success of economic reform but probably more for political than for economic reasons. Growth appears not to be hurt by minimum wages and mandatory benefits. But the relative size of organized labor (in government and elsewhere) is crucial....

The authors show that labor market policies and institutions affect the effectiveness of economic reform programs. They compare annual growth rates across 119 countries, using data from 449 World Bank adjustment credits and loans between 1980 and 1996. The results indicate that countries with...