Institutions and Job Growth in African Manufacturing: Does Employment Protection Regulation Matter?

Abstract

We use firm-level survey data from the manufacturing sector in 20 Sub-Saharan African (SSA) countries and Doing Business (DB) country indicators to explore the links between employment protection regulation (EPR) and firm job growth during the period 2003–07. We find that EPR is uncorrelated with job growth in the short run. In the long run, however, overall regulations as measured by DB scores are significantly adversely associated with job growth, while the evidence for a negative effect of EPR seems rather weak. Thus labour regulation reform might not lead to high employment payoffs in SSA; improving the overall investment climate should be the more immediate focus. Copyright 2013 , Oxford University Press.