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Product Market Reforms, Labour Market Institutions and Unemployment

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Author Info
Rachel Griffith
Rupert Harrison
Gareth Macartney

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Abstract

We analyse the impact of product market competition on unemployment, and how this depends on labour market institutions. Theoretically, both firms with market power and unions with bargaining power are constrained in their behaviour by the elasticity of demand in the product market. We use differential changes in regulations across OECD countries over the 1980s and 1990s to identify the effects of competition. We find that increased competition reduces unemployment, more so in countries with labour market institutions that increase worker bargaining power. We also find that competition increases real wages but less so when bargaining power is high. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0297.2007.02039.x
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Publisher Info
Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 117 (2007)
Issue (Month): 519 (03)
Pages: C142-C166
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Handle: RePEc:ecj:econjl:v:117:y:2007:i:519:p:c142-c166

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Belot, Michele & van Ours, Jan C., 2001. "Unemployment and Labor Market Institutions: An Empirical Analysis," Journal of the Japanese and International Economies, Elsevier, vol. 15(4), pages 403-418, December. [Downloadable!] (restricted)
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  2. Giuseppe Nicoletti & Stefano Scarpetta, 2005. "Product Market Reforms and Employment in OECD Countries," OECD Economics Department Working Papers 472, OECD, Economics Department. [Downloadable!]
  3. Nickell, Stephen, 1999. "Product markets and labour markets1," Labour Economics, Elsevier, vol. 6(1), pages 1-20, March. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Arjan Lejour & Hugo Rojas-Romagosa, 2008. "International spillovers of domestic reforms," CPB Discussion Papers 105, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  2. Da Rin, M. & Di Giacomo, M. & Sembenelli, A., 2008. "Firm Entry Dynamics and Taxation of Corporate Profits: Evidence from Europe," Discussion Paper 2008-65, Tilburg University, Center for Economic Research. [Downloadable!]
  3. Lars Calmfors & Giancarlo Corsetti & Michael P. Devereux & Gilles Saint-Paul & Hans-Werner Sinn & Jan-Egbert Sturm & Xavier Vives, 2008. "Chapter 3: The effect of globalisation on Western European jobs: curse or blessing?," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 71-104, 02. [Downloadable!]
  4. Gatti, Donatella & Vaubourg, Anne-Gaël, 2009. "Unemployment and Finance: How Do Financial and Labour Market Factors Interact?," IZA Discussion Papers 4075, Institute for the Study of Labor (IZA). [Downloadable!]
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  5. Martin Schindler, 2009. "The Italian Labor Market: Recent Trends, Institutions, and Reform Options," IMF Working Papers 09/47, International Monetary Fund. [Downloadable!]
  6. Gabriele CARDULLO, 2009. "The Distributive and Welfare Effects of Product and Labour Market Deregulation," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2009007, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  7. Susanne Prantl & Alexandra Spitz-Oener, 2009. "How does entry regulation influence entry into self-employment and occupational mobility?," IFS Working Papers W09/14, Institute for Fiscal Studies. [Downloadable!]
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  8. Flaig, Gebhard / Rottmann, Horst, 2007. "Labour Market Institutions and the Employment Intensity of Output Growth. An International Comparison," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  9. Paolo Buccirossi & Lorenzo Ciari & Tomaso Duso & Giancarlo Spagnolo & Cristiana Vitale, 2009. "Competition policy and productivity growth: An empirical assessment," CIG Working Papers SP II 2009-12, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
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  10. Kamila Fialová & Ondøej Schneider, 2008. "Labour Market Institutions and their Effect on Labour Market Performance in the New EU Member Countries," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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