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The Impact of Labor Litigation Cases on Firm-level Productivity in Brazil

Year: 2025

Type: article

Abstract: 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.

Source: IMF Working Paper

DOI: 10.5089/9798229006842.001

Authors: Swarnali Hannan, Samuel Pienknagura

Institution: International Monetary Fund

Language: English

Topic: Law, Economics, and Judicial Systems

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Decent work and economic growth, Peace, justice, and strong institutions, Industry, innovation and infrastructure

Open Access status: diamond

OpenAlex ID: W4409149713

FWCI: 0.973

Cites:

Cited by: 1

Related to: 10