The Impact of Labor Unions, Government Regulations and Social Protections on the Efficiency of Labor Market

Labor market is such a crucial area in every economy, that necessitates certain regulations and protections in the overall activity of the market, through government intervention, labor unions and social protections institutions, ultimately to protect the interest of the employees, employers and other relevant stakeholders in the market, with the soul aim of increasing the efficiency of the labor market in general. This research study tries to assess the impact of these regulations and labor institutions on the efficiency of the labor market. The study collected a across-sectional data from 80 developed and less developed countries, and applied an ordinary least squared (OLS) regression model to assess the impact of government regulation, labor unions and social protection on the efficiency of labor market across the developed and less developed countries, in an attempt to figure out whether these institutions and regulations achieved the aims and objectives, which is to enhance the overall efficiency of the labor market based on labor market institutions efficiency theory. The result shows that despite the fact that government regulation, labor unions and social protection have some significant positive impact on the efficiency of labor market, the variables also have negative impact on the labor market efficiency in some other ways, which create some forms of distortion in the market. Moreover, the result shows that these impacts differ across developed and less developed countries significantly. Keywords: Labor market, Government regulations (Minimum wage rate), Labor union density, Labor market efficiency, Social protections (social institutions)