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Beyond Specialization? Agencies for Labor Regulation in the 21st Century

Thu, August 30, 2:00 to 3:30pm, Hynes, 103

Abstract

Why do the locations, responsibilities, and jurisdictions of regulatory agents vary over time and space? I address the question by examining two different models of labor market regulation—the generalist “one inspector per firm” model found in the Latin world and the specialist “one inspector per law” alternative familiar to most North Americans—and find that they represent different approaches to maximizing the return on the state’s investment in the high cost of running a regulatory bureaucracy: While specialists are a fixed resource, and are thus well suited to Fordist economies marked by large firms, closed markets, and Keynesian demand management, generalists are a flexible resource, and are correspondingly better suited to post-Fordist economies marked by small firms, open markets, and volatile demand patterns. In particular, I find that generalists are able to: (i) compensate for the added transportation and transaction costs engendered by the decentralization of employment to small firms by addressing a larger number of violations to a smaller number of workers on each site visit; (ii) adjust to the volatile demand patterns found in open economies by addressing different violations at different stages of the business cycle; and (iii) temper the burden on small business, in particular, by evaluating the overall cost of compliance and adjusting the intensity and content of the enforcement effort accordingly. The results are potentially profound, for they suggest that the alleged affinity between industrialization and specialization has been rendered anachronistic in the regulatory as well as the productive sphere and that more flexible approaches are therefore in order not only in the regulation of the labor market but in the regulation of decentralized economic activity more generally.

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