ABSTRACT
Introduction Governments intervene in the labor market to protect the rights and interests of workers. They do so because workers generally have weak bargaining power in relation to that of their employers. Labor market regulations are enacted, therefore, to ensure that working conditions meet some standard of decency. Minimum wages, hiring and deployment conditions, and procedures for retrenchment are designed to have a positive impact on workers' welfare. These regulations also affect the flexibility of employers, however, and their costs in managing a workforce. The impact on employers may affect investment, production, and ultimately hiring decisions, although the effects of labor market regulation vary and remain controversial (Baccaro and Rei 2007; Feldmann 2009).
