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Is deregulation of product and labour markets promoting employment and productivity? A difference-in-differences approach

Author

Listed:
  • Hugo Correia

    (Nova School of Business and Economics)

  • Ana Fontoura Gouveia

    (GPEARI/Ministry of Finance and Nova SBE)

Abstract

This paper examine the impact of labour and product market reforms on sectoral employment and productivity, following a difference-in-differences approach. Using industry-level data for the period 1997-2013, we show that employment protection deregulation has a positive effect on sectoral employment for industries more exposed to labour market legislation, despite having a non-positive impact on productivity. Upstream product market deregulation also increases sectoral employment for the downstream sectors more dependent on upstream inputs. Nevertheless, it has mixed effects on sectoral productivity: while upstream sectors face productivity losses, the downstream sectors more exposed to the deregulated sectors grasp productivity gains.

Suggested Citation

  • Hugo Correia & Ana Fontoura Gouveia, 2017. "Is deregulation of product and labour markets promoting employment and productivity? A difference-in-differences approach," GEE Papers 0084, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Nov 2017.
    • Handle: RePEc:mde:wpaper:0084
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    File URL: https://www.gee.gov.pt/RePEc/WorkingPapers/GEE_PAPERS_84.pdf
    File Function: First version, 2017
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    Citations

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    Cited by:

    1. Christian Osterhold, 2018. "Fear the walking dead: zombie firms, spillovers and exit barriers," Working Papers w201811, Banco de Portugal, Economics and Research Department.
    2. Amoroso, Sara & Martino, Roberto, 2020. "Regulations and technology gap in Europe: The role of firm dynamics," European Economic Review, Elsevier, vol. 129(C).

    More about this item

    Keywords

    Labour Market Reforms; Product Market Reforms; Employment; Productivity;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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