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The employment effects of labor and product markets deregulations and their implications for structural reform

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  • Berger, Helge
  • Danninger, Stephan

Abstract

This study explores the effects of market deregulation on employment growth. Empirical analysis of an OECD country panel (1990-2004) suggests that lower levels of product and labor market regulation foster employment growth, including through sizable interaction effects. A theoretical framework is developed for evaluating deregulation strategies in the presence of reform costs. Optimal deregulation takes various forms depending on the deregulation costs and the strength of reform interactions. Compared to the first best, decentralized decision-making can lead to excessive or insufficient deregulation. Securing the first best requires coordinating deregulation activities across sectors and overcoming the partial perspective of decision makers. --

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Bibliographic Info

Paper provided by Free University Berlin, School of Business & Economics in its series Discussion Papers with number 2006/10.

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Date of creation: 2006
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Handle: RePEc:zbw:fubsbe:200610

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Keywords: Product market regulation; labor market regulation; employment growth; policy coordination; sequencing;

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Citations

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Cited by:
  1. Donatella Gatti & Anne-Gael Vaubourg, 2010. "Credit and Unemployment: Do Institutions Matter?," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 11(1), pages 37-43, 04.
  2. Koulovatianos, Christos & Schrder, Carsten & Schmidt, Ulrich, 2009. "Nonmarket Household Time and the Cost of Children," Journal of Business & Economic Statistics, American Statistical Association, vol. 27, pages 42-51.
  3. Donatella Gatti & Christophe Rault & Anne-Gael Vaubourg, 2009. "Unemployment and Finance: How do Financial and Labour Market Factors Interact?," CESifo Working Paper Series 2901, CESifo Group Munich.
  4. Koskela, Erkki & Stenbacka, Rune, 2012. "The relationship between product market competition and unemployment with profit sharing," Labour Economics, Elsevier, vol. 19(3), pages 291-297.
  5. 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.
  6. Fiori, Giuseppe & Nicoletti, Giuseppe & Scarpetta, Stefano & Schiantarelli, Fabio, 2007. "Employment Outcomes and the Interaction Between Product and Labor Market Deregulation: Are They Substitutes or Complements?," IZA Discussion Papers 2770, Institute for the Study of Labor (IZA).
  7. Paul Grauwe, 2009. "The Euro at ten: achievements and challenges," Empirica, Springer, vol. 36(1), pages 5-20, February.
  8. Donatella Gatti & Anne-Gaël Vaubourg, 2009. "Unemployment and finance: how do financial and labour market factors interact?," Working Papers halshs-00566792, HAL.
  9. Niklas Potrafke, 2010. "Labor market deregulation and globalization: empirical evidence from OECD countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 146(3), pages 545-571, September.
  10. Konrad Szelag, 2008. "A Single Fiscal Policy in the Euro Area: Vision or Utopia?," National Bank of Poland Working Papers 46, National Bank of Poland, Economic Institute.
  11. Carsten Hefeker, 2011. "Policy Uncertainty and Economic Reforms in a Monetary Union," German Economic Review, Verein für Socialpolitik, vol. 12(3), pages 274-285, 08.
  12. Paul De Grauwe, 2006. "On monetary and political union," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 7(4), pages 3-10, December.
  13. Martin Schindler, 2009. "The Italian Labor Market: Recent Trends, Institutions, and Reform Options," IMF Working Papers 09/47, International Monetary Fund.
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  15. Moretti, Laura, 2012. "Inflation targeting and product market deregulation," CFS Working Paper Series 2012/01, Center for Financial Studies (CFS).

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