This paper empirically explores the incidence of labor inspections across firms in 72
developing countries. Given the relatively little knowledge on the behavior of labor
inspection agencies, our objective is to present a collection of stylized facts on the
incidence of enforcement. Our findings consistently show that larger firms are more
likely to be inspected than smaller firms. Interestingly, inspections are less likely to occur
among firms with a larger share of low-skilled workers, and that operate in industries
with more tax evasion. Furthermore, we do not find evidence that the firm’s market
power is correlated with inspections. We explore the heterogeneity of these findings
across income and geographic groups, and conclude by briefly discussing the consistency
of the stylized facts with competing theories of inspection agencies behavior. Overall, the
evidence suggests that inspection agencies in the developing world usually have low
levels of efficiency and effectiveness.