Do Labor Market Rigidities Have Microeconomic Effects? Evidence from within the Firm
AbstractWe exploit a unique outlet-level dataset from a multinational chain with over 2,500 outlets in 43 countries to investigate the effects of labor regulations that protect employment. The dataset contains information on output, materials, and labor costs at a weekly frequency over several years, allowing us to examine the consequences of labor market rigidity at a much more detailed level than has been possible to date. We find that higher labor market rigidity is associated with significantly higher levels of hysteresis. We also find some evidence that labor costs are less responsive to sales revenue in more highly regulated markets. (JEL: E24, J08, J23, K31, M51)
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Journal: Applied Economics.
Volume (Year): 1 (2009)
Issue (Month): 2 (April)
Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
- M51 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Firm Employment Decisions; Promotions
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