Direct and Spillover Impacts of Increasing Enforcement of Labor Laws: Evidence from Argentina

Abstract

This paper studies how increases in labor standards and enforcement affect workers and their families. Using a policy in Argentina that targeted domestic workers and their employers, I find a 35% increase in formality rates of domestic workers and a 4.2% increase in monthly earnings, despite a 3.9% reduction in hours of work per week. Moreover, I find evidence that the policy had effects on the labor supply decisions of other members of the domestic workers' households: hours worked by spouses of domestic workers and the labor force participation of young adult children of domestic workers decrease after the reform, an effect driven mostly by girls. The reform also helped close the educational gender gap: school attendance and years of education increased by 3% among boys of secondary school age, and secondary school completion increased by 20% among older boys. Taken together, the results suggest that higher labor standards and their enforcement can have sizable impacts among low-skilled workers as well as their families.