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The Impact of Labour Market Policies on Productivity in OECD Countries

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Author Info

  • Andrea Bassanini
  • Danielle Venn

Abstract

We investigate the impact of labour market policies on labour and multifactor productivity with industry-level data. First and foremost, labour market policies can influence average measured productivity through their impact on employment. Other things equal, employment growth tends to be associated with lower average measured labour productivity growth as more low-skilled workers enter the workforce. However, policies can also have sizeable direct effects on individual productivity levels and/or growth by creating incentives for workers to invest in training, facilitating reallocation of resources to their most productive uses and generating or maintaining high-quality job matches. We find that employment protection legislation, minimum wages, parental leave and unemployment benefits influence productivity through multiple channels, over and above their impact on employment levels.

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File URL: http://www.csls.ca/ipm/17/IPM-17-bassanini.pdf
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Bibliographic Info

Article provided by Centre for the Study of Living Standards in its journal International Productivity Monitor.

Volume (Year): 17 (2008)
Issue (Month): (Fall)
Pages: 3-15

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Handle: RePEc:sls:ipmsls:v:17:y:2008:1

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Related research

Keywords: Regulation; Labour Market; Productivity; OECD;

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References

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Cited by:
  1. Albert van der Horst & Hugo Rojas-Romagosa & Leon Bettendorf, 2009. "Does employment affect productivity?," CPB Discussion Paper 119, CPB Netherlands Bureau for Economic Policy Analysis.

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