Abstract

How should insecure leaders deal with labor rights in the face of an economic downturn? Economic theory suggests that suppressing labor rights boosts the economy and that economic growth also dampens violent political opposition. As a result, the suppression of labor rights should contribute to more job security for leaders. However, some other scholars maintain that more repression actually increases the probability of opposition. As a result, the policy implication of this argument is that leaders would be better off if they choose to improve the protection of labor rights. Our simple formal model demonstrates that the second argument is more likely to be the case. The probit analysis of 146 countries from 1984 to 2004 bears out this prediction. We also find that this relationship is stronger in non-democracies than in democracies. Our study appears to provide some support to Bueno de Mesquita et al.’s statement that policies that are good for political survival may not necessarily be good for the economy.