Electronic monitoring of working time and labour market outcomes: Evidence from Brazil

Abstract

AbstractThis study analyses the dynamics of registered firms after implementing a new law (2009) in the Brazilian labour market. The law proposed the electronic monitoring of working time to provide more efficiency and security by standardizing the equipment used for control and avoiding manipulation. As stricter monitoring may increase costs, this paper seeks to analyse whether there have been changes in the dynamics of firms adapting to the new regulation. There are two potential mechanisms as a reference: increasing wages and decreasing workers (or contracted hours), and increasing labour force and decreasing contracted hours per worker (and therefore the monthly wage). Using Brazilian employee–employer data and the difference‐in‐differences approach as an empirical strategy, our main findings suggest that firms that adapt to the new electronic workday control had a general reduction in the number of hours hired, an increase in wages for companies with 10–50 employees and a decrease in workplace accidents in firms with 50 or more employees.