LABOR-MARKETS IN AN ERA OF ADJUSTMENT - EVIDENCE FROM 12 DEVELOPING-COUNTRIES

This article summarizes the results of studies focusing on labour markets and structural adjustment in 12 developing countries. There are three main conclusions. Firstly, real wages are more flexible than is generally supposed, which suggests that labour markets are not a source of rigidity impeding adjustment. Secondly, labour reallocation across sectors has occurred in more or less the desired direction. Thirdly, labour market institutions such as trade unions, which it is sometimes argued are an impediment to adjustment, have more subtle effects on labour market workings and these are worthy of further study.