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The Employment Effects of Labor and Product Market Deregulation and Their Implications for Structural Reform

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Author Info
Helge Berger
Stephan Danninger

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Abstract

This study explores the effects of labor and product market deregulation on employment growth. Our empirical results, based on an Organization for Economic Cooperation and Development country sample from 1990 to 2004, suggest that lower levels of product and labor market regulation foster employment growth, including through sizable interaction effects. Based on these findings, the paper discusses a theoretical framework for evaluating deregulation strategies in the presence of reform costs. Optimal deregulation takes various forms depending on the deregulation costs and the strength of reform interactions. Compared with the first-best policy, decentralized decision making can lead to excessive or insufficient deregulation. IMF Staff Papers (2007) 54, 591–619. doi:10.1057/palgrave.imfsp.9450014

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Article provided by Palgrave Macmillan Journals in its journal IMF Staff Papers.

Volume (Year): 54 (2007)
Issue (Month): 3 (July)
Pages: 591-619
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Handle: RePEc:pal:imfstp:v:54:y:2007:i:3:p:591-619

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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.:
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  3. Michael Fertig & Jochen Kluve, 2004. "A Conceptual Framework for the Evaluation of Comprehensive Labor Market Policy Reforms in Germany," RWI Discussion Papers 0013, Rheinisch-Westfälisches Institut für Wirtschaftsforschung. [Downloadable!]
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Cited by:
(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. Martin Schindler, 2009. "The Italian Labor Market: Recent Trends, Institutions, and Reform Options," IMF Working Papers 09/47, International Monetary Fund. [Downloadable!]
  2. Giuseppe Fiori & Giuseppe Nicoletti & Stefano Scarpetta & Fabio Schiantarelli, 2007. "Employment Outcomes and the Interaction Between Product and Labor Market Deregulation: Are They Substitutes or Complements?," Boston College Working Papers in Economics 663, Boston College Department of Economics, revised 08 Aug 2008. [Downloadable!]
    Other versions:
  3. Paul Grauwe, 2009. "The Euro at ten: achievements and challenges," Empirica, Springer, vol. 36(1), pages 5-20, February. [Downloadable!] (restricted)
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