Who opposes labor regulation? Explaining variation in employers’ opinions

Abstract

Competing accounts of the effect of globalization on labor politics agree that firms influence regulations, but make contrasting predictions for which firms are most likely to oppose regulations. Using survey data from employers in 19,000 manufacturing firms in 82 developing countries, we examine the determinants of employers’ opinions toward labor regulation. In contrast to the predictions of optimistic theories of globalization, we find that (i) firms that export are more likely to have negative opinions toward labor regulation than those that sell domestically, and (ii) firms that receive foreign direct investment have similar views as firms that rely only on domestic capital. Further, we show that systematic differences in employers’ opinions depend on the intensity of the competitive pressures they face and their use of skilled workers. In doing so, we provide an empirically grounded account of the heterogeneous opinions of key actors in economic policymaking in developing countries.