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REPLICATION PACKAGE
"The Political Economy of Labor Policy"
Diego Huerta
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Paper: https://www.diegohuertad.com/working_paper/labor_policy/The_Political_Economy_Labor_Policy.pdf


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1. OVERVIEW
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This replication package reproduces Figure 1 and Table 3 of the paper. It also
contains the data collected by the author on size-contingent employment
protection legislation (EPL) across countries and over time.


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2. DATA AVAILABILITY AND SOURCES
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The data on regulatory thresholds were collected manually by the author. The
sources and a description of each country's regulatory thresholds are provided
in Appendix C of the paper.

Additional variables are taken from the following publicly available sources:

  - World Bank Database of Political Institutions: political orientation of
    the executive and electoral-system variables.
  - La Porta, Lopez-de-Silanes, and Shleifer (2008): legal origin.
  - Alesina et al. (2003): ethnic fractionalization.
  - V-Dem Dataset, Version 10 (Coppedge et al., 2020): electoral democracy
    index.


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3. FILES INCLUDED
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Data/Size_contingent_EPL.xlsx
    Data on the adoption and evolution of size-contingent EPL across countries
    and over time, i.e., the firm-size threshold above which EPL becomes
    stricter (number of employees).

Empirical_motivation_Figure1.m
    MATLAB script that produces panels (a) and (b) of Figure 1. It saves two
    figures, panel_a_left_wing.pdf and panel_b_right_wing.pdf, in the folder
    "Figure1".

Empirical_motivation_Table3.do
    Stata do-file that runs the regressions reported in Table 3. It saves the
    results as Table3.xls in the folder "Table3".


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4. VARIABLE DESCRIPTIONS (Size_contingent_EPL.xlsx)
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country             Country name.

Wcode               World Bank country code.

year                Year in which the regulatory threshold was adopted or
                    modified.

size                Regulatory threshold (number of employees) above which EPL
                    becomes stricter.

pol                 Political orientation of the executive, from the World Bank
                    Database of Political Institutions:
                    -1 = Left, 0 = Center, 1 = Right.

pol_or_Left         Indicator for a left-wing executive.
pol_or_Center       Indicator for a centrist executive.
pol_or_Right        Indicator for a right-wing executive.

proportionality     Degree of proportional representation in the electoral
                    system:
                    3 = all seats are assigned by a proportional rule;
                    2 = most seats are assigned proportionally;
                    1 = a minority of seats are assigned proportionally;
                    0 = no seats are assigned proportionally.
                    Constructed as proportionality = pr - plurality -
                    housesys + 2, using variables from the World Bank Database
                    of Political Institutions.

legalorigin         Country's legal origin: English, French, German,
                    Scandinavian, or Socialist (La Porta et al., 2008).

legal_English       Indicator for English legal origin.
legal_French        Indicator for French legal origin.
legal_German        Indicator for German legal origin.
legal_Scandinavian  Indicator for Scandinavian legal origin.
legal_Socialist     Indicator for Socialist legal origin.


ethnic              Ethnic fractionalization index (Alesina et al., 2003).

v2x_polyarchy       Electoral democracy index from the V-Dem Dataset, Version
                    10 (Coppedge et al., 2020).


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5. COMPUTATIONAL REQUIREMENTS AND INSTRUCTIONS
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Software:
  - MATLAB (tested with R2015a)
  - Stata (tested with version 13)

Instructions:
  1. Set the working directory to the root folder of this replication package.
  2. Run Empirical_motivation_Figure1.m in MATLAB to reproduce Figure 1.
  3. Run Empirical_motivation_Table3.do in Stata to reproduce Table 3.

Output:
  Figure 1   ->  Figure1/panel_a_left_wing.pdf
                 Figure1/panel_b_right_wing.pdf
  Table 3    ->  Table3/Table3.xls


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6. REFERENCES
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Alesina, Alberto, Arnaud Devleeschauwer, William Easterly, Sergio Kurlat, and
    Romain Wacziarg. 2003. "Fractionalization." Journal of Economic Growth 8:
    155-194.

Coppedge, Michael, John Gerring, Carl Henrik Knutsen, Staffan I. Lindberg, Jan
    Teorell, David Altman, Michael Bernhard, M. Steven Fish, Adam Glynn, Allen
    Hicken, et al. 2020. "V-Dem Dataset V10." Varieties of Democracy (V-Dem)
    Project.

La Porta, Rafael, Florencio Lopez-de-Silanes, and Andrei Shleifer. 2008. "The
    Economic Consequences of Legal Origins." Journal of Economic Literature 46
    (2): 285-332.

World Bank. Database of Political Institutions (DPI).
