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Product Market Deregulation and the U.S. Employment Miracle

  • Monique Ebell

    (Humboldt University, Berlin)

  • Christian Haefke

    (Institute for Higher Studies, Vienna)

We consider the dynamic relationship between product market entry regulation and equilibrium unemployment. The main theoretical contribution is combining a job matching model with monopolistic competition in the goods market and individual bargaining. We calibrate the model to US data and perform a policy experiment to assess whether the decrease in trend unemployment during the 1980's and 1990's could be directly attributed to product market deregulation. Under our baseline calibration, our results suggest that a decrease of less than two-tenths of a percentage point of unemployment rates can be attributed to product market deregulation, a surprisingly small amount. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2008.11.002
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 12 (2009)
Issue (Month): 3 (July)
Pages: 479-504

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Handle: RePEc:red:issued:06-224
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