PhD Seminar (Econ)
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This study examines the impact of labor market regulation at different stages of economic development, and its relative importance to other macroeconomic variables. Using multi-country data from 2002 to 2015 and GMM techniques, the authors finds that labor market regulation significantly affects foreign direct investment positions at any stage of development with no evidence of heterogeneity among the group. The study shows that labor market flexibility is an important factor in FDI accumulation after agglomeration, market size, and trade openness, with an increasing impact if minimum wages are considered. Estimates are consistent and robust with the inclusion of business regulation in the model.