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Labor and Product Market Deregulation

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  • Helge Berger
  • Stephan Danninger

Abstract

This study explores the effects of labor and product market deregulation on employment growth. Our empirical results, based on an OECD country panel from 1990-2004, suggest that lower levels of product and labor market regulation foster employment growth, including through sizable interaction effects. Based on these findings, the paper develops a theoretical framework for evaluating deregulation strategies in the presence of reform costs. Optimal deregulation takes various forms depending on the deregulation costs, the strength of reform interactions, and the perspective of the policymaker. Unless deregulation costs are very asymmetric across markets, optimal deregulation requires some form of coordination.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 05/227.

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Length: 35
Date of creation: 01 Dec 2005
Date of revision:
Handle: RePEc:imf:imfwpa:05/227

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Keywords: Labor market policy; Economic models; employment; labor market; employment growth; labor demand; labor market regulation; employment effects; unemployment; employment protection; labor supply; temporary employment; labor markets; aggregate employment; employment effect; labor market deregulation; employment growth rate; labor market reforms; labor market reform; employment impact; regular employment; employment contracts; employment growth rates; labor market outcomes; collective bargaining; employment protection legislation; labor market liberalization; full-time employment; labor costs; collective dismissals; restrictive labor market regulation; frictional unemployment; new jobs; sectoral employment; jobs; job creation; equilibrium unemployment; reduction in employment; job growth; labor office; employment level; labor market regulations; unemployment level; service sector employment; displaced workers; employment outlook; labour; part-time employment; effects on employment; full employment; collective dismissal; service employment; terms of employment; labour market institutions; labor market policies; labor market adjustment; labour market;

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References

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Citations

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Cited by:
  1. Arjan Lejour & Hugo Rojas-Romagosa, 2008. "International spillovers of domestic reforms: the joint application of the Lisbon Strategy in the EU," CPB Discussion Paper 105, CPB Netherlands Bureau for Economic Policy Analysis.
  2. Yu-Fu Chen & Michael Funke, 2005. "Product Market Competition, Investment and Employment-Abundant versus Job-Poor Growth: A Real Options Perspective," Quantitative Macroeconomics Working Papers 20510, Hamburg University, Department of Economics.
  3. Sebastian Weber, 2006. "Labor Market Structures, Trade and their Effect on Unemployment: A Theoretical Analysis and Empirical Investigation," IHEID Working Papers 22-2006, Economics Section, The Graduate Institute of International Studies.
  4. Marcel Canoy & Peter Smith, 2008. "Services and the Single Market," Journal of Industry, Competition and Trade, Springer, vol. 8(3), pages 319-347, December.
  5. Jacques Pelkmans & Lourdes Acedo Montoya & Alessandro Maravalle, 2008. "How product market reforms lubricate shock adjustment in the euro area," European Economy - Economic Papers 341, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  6. Berger, Helge & Danninger, Stephan, 2006. "The employment effects of labor and product markets deregulations and their implications for structural reform," Discussion Papers 2006/10, Free University Berlin, School of Business & Economics.
  7. Dominik Enste, 2010. "Regulation and shadow economy: empirical evidence for 25 OECD-countries," Constitutional Political Economy, Springer, vol. 21(3), pages 231-248, September.
  8. Buscher, Herbert & Dreger, Christian & Ramos, Raul & Surinach, Jordi, 2005. "The Impact of Institutions on the Employment Performance in European Labour Markets," IZA Discussion Papers 1732, Institute for the Study of Labor (IZA).
  9. Carsten Hefeker, 2006. "EMU Enlargement, Policy Uncertainty and Economic Reforms," CESifo Working Paper Series 1767, CESifo Group Munich.
  10. Nadine Leiner-Killinger & Víctor López Pérez & Roger Stiegert & Giovanni Vitale, 2007. "Structural reforms in EMU and the role of monetary policy – a survey of the literature," Occasional Paper Series 66, European Central Bank.
  11. Manmohan S. Kumar & Dennis P. J. Botman, 2007. "Global Aging Pressures," IMF Working Papers 07/196, International Monetary Fund.

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