2009 Reports

Labor Legislation and its Adverse Impacts on Transaction Costs in Brazilian Agriculture

Rezende, Gervasio Castro de; Ferreira, Leo da Rocha; Kreter, Ana Cecilia

The objective of this paper is to analyze the inadequate pattern of labor absorption in Brazilian agriculture, focusing, specially, on the role of agricultural labor policy. While pointing out the negative role played by the so-called "labor surcharges", the paper gives more emphasis on the "transaction costs" associated to this policy. For the analysis of the role played by agricultural labor policy, it is actually proposed that these "transaction costs" are more important than the "labor surcharges". Finally, in order to allow for much freer contracting among the several parties involves in these markets, it is proposed a radical change in the current agricultural labor policy. However, this does not mean that the public sector should leave this labor market altogether; after all, public regulation is necessary for the enforcement of the contracts.