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Employment Outcomes and the Interaction Between Product and Labor Market Deregulation: Are They Substitutes or Complements?

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Author Info

  • Fiori, Giuseppe

    ()
    (North Carolina State University)

  • Nicoletti, Giuseppe

    ()
    (OECD)

  • Scarpetta, Stefano

    ()
    (OECD)

  • Schiantarelli, Fabio

    ()
    (Boston College)

Abstract

This paper provides a systematic empirical investigation of the effect of product market liberalization on employment when there are interactions between policies and institutions in product and labor markets. Using panel data for OECD countries over the period 1980-2002, we present evidence that product market deregulation is more effective at the margin when labor market regulation is high. Moreover, there is evidence in our sample that product market deregulation promotes labor market deregulation. We show that these results are mostly consistent with the basic predictions of a standard bargaining model, such as Blanchard and Giavazzi (2003), extended to allow for a richer specification of the fall back position of the union and for taxation.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2770.

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Length: 46 pages
Date of creation: May 2007
Date of revision:
Publication status: published as "Employment Effects of Product and Labour Market Reforms: Are There Synergies?" in: Economic Journal, 2012, 122 (558), 79-104
Handle: RePEc:iza:izadps:dp2770

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Keywords: liberalization; competition; employment; unions; deregulation;

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References

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  1. Takeshi Koyama & Stephen S. Golub, 2006. "OECD's FDI Regulatory Restrictiveness Index: Revision and Extension to more Economies," OECD Working Papers on International Investment, OECD Publishing 2006/4, OECD Publishing.
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  3. Berger, Helge & Danninger, Stephan, 2006. "The employment effects of labor and product markets deregulations and their implications for structural reform," Discussion Papers, Free University Berlin, School of Business & Economics 2006/10, Free University Berlin, School of Business & Economics.
  4. Boeri, Tito & Nicoletti, Giuseppe & Scarpetta, Stefano, 2000. "Regulation And Labour Market Performance," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2420, C.E.P.R. Discussion Papers.
  5. Nicoletti, Giuseppe & Scarpetta, Stefano, 2003. "Regulation, productivity, and growth : OECD evidence," Policy Research Working Paper Series, The World Bank 2944, The World Bank.
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  7. Francesco Daveri & Guido Tabellini, 2000. "Unemployment, growth and taxation in industrial countries," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 15(30), pages 47-104, 04.
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  9. Monique Ebell & Christian Haefke, 2002. "Product market deregulation and labor market outcomes," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 726, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 2003.
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  15. Belot, M.V.K. & Ours, J.C. van, 2000. "Does the Recent Success of some OECD Countries in Lowering their Unemployment Rates lie in the Clever Design of their Labour Market Reforms?," Discussion Paper, Tilburg University, Center for Economic Research 2000-40, Tilburg University, Center for Economic Research.
  16. Takeshi Koyama & Stephen S. Golub, 2006. "OECD's FDI Regulatory Restrictiveness Index: Revision and Extension to more Economies," OECD Economics Department Working Papers, OECD Publishing 525, OECD Publishing.
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  19. Robert J. Flanagan, 1999. "Macroeconomic Performance and Collective Bargaining: An International Perspective," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 37(3), pages 1150-1175, September.
  20. Martín Rama & Guido Tabellini, . "Lobbying by Capital and Labor over Trade and Labor Market Policies," Working Papers, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University 94, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  21. Giuseppe Nicoletti & Stefano Scarpetta, 2005. "Product Market Reforms and Employment in OECD Countries," OECD Economics Department Working Papers, OECD Publishing 472, OECD Publishing.
  22. Murphy, Kevin M & Topel, Robert H, 1985. "Estimation and Inference in Two-Step Econometric Models," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 3(4), pages 370-79, October.
  23. Jens Høj & Vincenzo Galasso & Giuseppe Nicoletti & Thai-Thanh Dang, 2006. "The Political Economy of Structural Reform: Empirical Evidence from OECD Countries," OECD Economics Department Working Papers, OECD Publishing 501, OECD Publishing.
  24. Messina, Julián, 2003. "The role of product market regulations in the process of structural change," Working Paper Series, European Central Bank 0217, European Central Bank.
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  26. Christian Haefke & Monique Ebell, 2004. "The Missing Link: Product Market Regulation, Collective Bargaining and the European Unemployment Puzzle," 2004 Meeting Papers, Society for Economic Dynamics 759, Society for Economic Dynamics.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Le Liberalizzazioni di Monti e la Crescita
    by Paolo Manasse in Back-Of-The-Envelope Economics on 2012-01-20 16:17:00
  2. Will Monti’s Liberalizations Jump Start Italy’s Growth?
    by Paolo Manasse in Back-Of-The-Envelope Economics on 2012-01-20 16:14:00
  3. Will Monti’s Liberalizations Jump Start Italy’s Growth?
    by Paolo Manasse in Back-Of-The-Envelope Economics on 2012-01-20 16:14:00
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