July 2020

IZA DP No. 13513: Teaching Labor Laws: Evidence From a Randomized Control Trial in South Africa

published in: American Economic Review, 2021, 13 (4), 124 - 149

We assess whether imperfect knowledge of labor regulation hinders job creation at small and medium-sized firms. We partner with a labor law expert that provides information about labor regulation via newsletters and access to a specialized website. We randomly assign 1800 firms to get access to this service for a 21-week period. Six months later, the average employment level at treatment firms was 12% higher than at control firms. The intervention decreased the perception that labor regulation is a constraint to hiring and increased optimal employment level.