The Impact of Labor Litigation Cases on Firm-level Productivity in Brazil
The Impact of Labor Litigation Cases on Firm-level Productivity in Brazil
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Volume/Issue:
Volume 2025
Issue 063
Publication date: April 2025
ISBN: 9798229006842
$20.00
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Topics covered in this book
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Labor , Labor market reforms , litigation cases , total factor productivity , Labor costs , IMF Administrative Tribunal , United Kingdom , Advanced Economies , Wage setting , Productivity , Labor force participation , Labor productivity , Employment , Labor market policy , Labor markets , Total factor productivity , Labor force , Labor market reforms , Caribbean , Global
Summary
The Brazilian labor market went through significant changes in 2017 with reforms to reduce litigation and increase flexibility in employment contracts. Using firm-level data, we exploit the variation in litigation cases across Brazilian states to estimate the impact of the 2017 labor reforms on productivity. The results suggest a significant boost in total factor productivity (TFP) for labor- and trade-intensive firms from the decline in litigation costs. High labor intensive firms witnessed an increase in TFP of about 15 percent after the reform compared to low labor-intensive firms. Similar magnitudes are found for trade-internsive firms. There is also some suggestive evidence that the productivity-enhancing effects of the reforms are especially pronounced for small firms.
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