This paper studies theoretically and empirically why and how labor policies may reduce productivity and employment in order to stabilize labor incomes and redistribute resources. It proposes a specific stylized model where the tradeoffs facing labor policies are influenced by structural factors,...

When enacting labor market regulation governments face courts that interpret and implement the legal code. We show that the incentives for governments for labor market reform increase with the uncertainty that is involved in the implementation of legal codes through courts. Given that judges...