Teaching Labor Laws: Evidence from a Randomized Control Trial in South Africa†

We assess whether imperfect knowledge of labor regulation hinders job creation at small and medium-sized firms. We partner with a labor law expert organization that provides information about labor regulation via newsletters and access to a specialized website. We randomly assign 1,800 firms to get access to this service for a 21-week period. Six months later, the average employment level at treatment firms was 12 percent higher than at control firms. The intervention decreased the perception that labor regulation is a constraint to hiring and increased optimal employment level.