Does employment protection unprotect workers? The labor market effects of job reinstatements in Peru

We investigate the labor market effects of reestablishment workers’ right to reinstatement for unfair dismissals, which occurred in 2002 Peru. Using data from Household Surveys 2004 2015, and Specialized Employment Survey 1998–2001, we estimate a series quasi-experimental difference-in-difference models permanent temporary hiring. evaluate potential rights on private sector with respect non-private sector. find that are associated increases hiring workers reductions wages. However, further tests indicate none these associations is causal effect, remarkable exception: by 2.5 percentage points relative These hold under battery alternative specifications robust placebo tests. Our findings call into question effectiveness removing laws as policy increase