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Employment Protection and Product Market Regulation

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Author Info

  • Koeniger, Winfried

    ()
    (University of St. Gallen)

  • Vindigni, Andrea

    ()
    (IMT Lucca)

Abstract

Product market regulation and employment protection are highly correlated across OECD countries. Using an augmented model of monopolistic competition we show why in countries with more regulated product markets, incumbent workers prefer to protect jobs relatively more. Product market regulation increases the scope for employment protection because firms can bear the cost of employment protection more easily and still break even. Moreover, product market regulation decreases employment so that the workers' outside option becomes relatively worse. This increases the incentive to protect the job.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 880.

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Length: 39 pages
Date of creation: Oct 2003
Date of revision:
Handle: RePEc:iza:izadps:dp880

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Keywords: collective dismissal cost; political economy;

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Cited by:
  1. Philippe Aghion & Philippe Askenazy & Renaud Bourlès & Gilbert Cette & Nicolas Dromel, 2009. "Distance to Technological Frontier, Market Rigidities, Education, and Growth," Economie et Statistique, Institut National de la Statistique et des Etudes Economiques, vol. 419, pages 11-30, August.
  2. Brügemann, Björn, 2006. "Does Employment Protection Create Its Own Political Support?," IZA Discussion Papers 2286, Institute for the Study of Labor (IZA).
  3. Amable, Bruno & Demmou, Lilas & Gatti, Donatella, 2007. "Employment Performance and Institutions: New Answers to an Old Question," IZA Discussion Papers 2731, Institute for the Study of Labor (IZA).
  4. Ansgar Belke & Bernhard Herz & Lukas Vogel, 2007. "Reforms, Exchange Rates and Monetary Commitment: A Panel Analysis for OECD Countries," Open Economies Review, Springer, vol. 18(3), pages 369-388, July.
  5. Antonio Scialà & Riccardo Tilli, 2007. "Financing unemployment benefits by goods market competition: fiscal policy and deregulation with market imperfections," "Marco Fanno" Working Papers 0047, Dipartimento di Scienze Economiche "Marco Fanno".
  6. Ansgar Belke & Bernhard Herz & Lukas Vogel, 2006. "Beyond Trade – Is Reform Effort Affected by the Exchange Rate Regime? A Panel Analysis for the World versus OECD Countries," Economie Internationale, CEPII research center, issue 107, pages 29-58.
  7. Larch, Martin & van den Noord, Paul & Jonung, Lars, 2011. "The Stability and Growth Pact: Lessons from the Great Recession," Working Papers 2011:6, Lund University, Department of Economics.
  8. Christian Dreger & Manuel Art�s & Rosina Moreno & Raúl Ramos & Jordi Suri�ach, 2007. "Study on the feasibility of a tool to measure the macroeconomic impact of structural reforms," European Economy - Economic Papers 272, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  9. Simon Deakin & Prabirjit Sarkar, 2008. "Assessing the Long-Run Economic Impact of Labour Law Systems: A theoretical Reappraisal and Analysis of New Time Series Data," ESRC Centre for Business Research - Working Papers wp367, ESRC Centre for Business Research.
  10. Vincent Anesi & Philippe De Donder, 2013. "A coalitional theory of unemployment insurance and employment protection," Economic Theory, Springer, vol. 52(3), pages 941-977, April.
  11. Gilbert Cette & Jimmy Lopez, 2008. "What Explains the ICT Diffusion Gap Between the Major Industrialized Countries: An Empirical Analysis?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 17, pages 28-39, Fall.
  12. 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.
  13. Helge Berger & Stephan Danninger, 2005. "Labor and Product Market Deregulation," IMF Working Papers 05/227, International Monetary Fund.
  14. Bjoern Bruegemann, 2005. "Does Employment Protection Create Its Own Political Support? The Role of Wage Determination," 2005 Meeting Papers 811, Society for Economic Dynamics.
  15. repec:hal:wpaper:halshs-00590495 is not listed on IDEAS

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