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Employment Outcomes and the Interaction Between Product and Labor Market Deregulation: Are They Substitutes or Complements?

Author

Listed:
  • Giuseppe Fiori

    () (Boston College)

  • Giuseppe Nicoletti

    (OECD)

  • Stefano Scarpetta

    (OECD
    IZA)

  • Fabio Schiantarelli

    () (Boston College
    IZA)

Abstract

This paper provides a systematic empirical investigation of the effect of product market liberalization on employment when there are interactions between policies and institutions in product and labor markets. Using panel data for OECD countries over the period 1980-2002, we present evidence that product market deregulation is more effective at the margin when labor market regulation is high. Moreover, there is evidence in our sample that product market deregulation promotes labor market deregulation. We show that these results are mostly consistent with the basic predictions of a standard bargaining model (e.g. Blanchard and Giavazzi (2003)), once one allows for a full specification of the fall back position of the unions.

Suggested Citation

  • Giuseppe Fiori & Giuseppe Nicoletti & Stefano Scarpetta & Fabio Schiantarelli, 2007. "Employment Outcomes and the Interaction Between Product and Labor Market Deregulation: Are They Substitutes or Complements?," Boston College Working Papers in Economics 663, Boston College Department of Economics, revised 08 Aug 2008.
  • Handle: RePEc:boc:bocoec:663
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Employment; Competition; Deregulation; Liberalization; Unions;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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