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The Impact of Labour Market Policies on Productivity in OECD Countries

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  • Andrea Bassanini
  • Danielle Venn

Abstract

We investigate the impact of labour market policies on labour and multifactor productivity with industry-level data. First and foremost, labour market policies can influence average measured productivity through their impact on employment. Other things equal, employment growth tends to be associated with lower average measured labour productivity growth as more low-skilled workers enter the workforce. However, policies can also have sizeable direct effects on individual productivity levels and/or growth by creating incentives for workers to invest in training, facilitating reallocation of resources to their most productive uses and generating or maintaining high-quality job matches. We find that employment protection legislation, minimum wages, parental leave and unemployment benefits influence productivity through multiple channels, over and above their impact on employment levels.

Suggested Citation

  • Andrea Bassanini & Danielle Venn, 2008. "The Impact of Labour Market Policies on Productivity in OECD Countries," International Productivity Monitor, Centre for the Study of Living Standards, vol. 17, pages 3-15, Fall.
  • Handle: RePEc:sls:ipmsls:v:17:y:2008:1
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    References listed on IDEAS

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    Cited by:

    1. Cceilia Iona Lasino & Giovanna Vallanti, 2011. "Reforms, labour market functioning and productivity dynamics: a sectoral analysis for Italy," Working Papers LuissLab 1193, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    2. Albert van der Horst & Hugo Rojas-Romagosa & Leon Bettendorf, 2009. "Does employment affect productivity?," CPB Discussion Paper 119, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Tatiana Didier & M. Ayhan Kose & Franziska Ohnsorge & Lei Sandy Ye1, 2015. "Slowdown in Emerging Markets: Rough Patch or Prolonged Weakness?," Policy Research Notes (PRNs) 101741, The World Bank.
    4. Gilbert Cette & Jimmy Lopez & Jacques Mairesse, 2016. "Product and Labour Market Regulations, Production Prices, Wages and Productivity," Review of Economics and Institutions, Università di Perugia, vol. 7(2).
    5. Don Drummond & Evan Capeluck & Matthew Calver, 2015. "The Key Challenge for Canadian Public Policy: Generating Inclusive and Sustainable Economic Growth," CSLS Research Reports 2015-11, Centre for the Study of Living Standards.
    6. Bergljot B Barkbu & Jesmin Rahman & Rodrigo O. Valdes, 2012. "Fostering Growth in Europe Now," IMF Staff Discussion Notes 12/07, International Monetary Fund.
    7. repec:spr:jlabrs:v:50:y:2017:i:1:d:10.1007_s12651-017-0222-8 is not listed on IDEAS
    8. Lisi, Domenico & Malo, Miguel, 2014. "Cross-Sectors Skill Intensity, Productivity and Temporary Employment," MPRA Paper 56470, University Library of Munich, Germany.
    9. repec:bla:labour:v:31:y:2017:i:4:p:415-432 is not listed on IDEAS
    10. Joseph J. Sabia, 2015. "Do minimum wages stimulate productivity and growth?," IZA World of Labor, Institute for the Study of Labor (IZA), pages 221-221, December.
    11. Nicola Brandt, 2012. "Reducing Poverty in Chile: Cash Transfers and Better Jobs," OECD Economics Department Working Papers 951, OECD Publishing.
    12. Serguey Ivanov, 2009. "Demographic and economic factors of labour supply: Long-term projections and policy options for France, Germany, Italy and the United Kingdom," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 7(1), pages 83-122.

    More about this item

    Keywords

    Regulation; Labour Market; Productivity; OECD;

    JEL classification:

    • P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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