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Do Labour Laws Increase Equality at the Expense of Higher Unemployment? The Experience of Six OECD Countries, 1970-2010

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  • Simon Deakin
  • Jonas Malmberg
  • Prabirjit Sarkar

Abstract

Using longitudinal data on labour law in France, Germany, Japan, Sweden, the UK and the USA for the four decades after 1970, we estimate the impact of labour regulation on unemployment and equality, using labour's share of national income as a proxy for the latter. We employ a dynamic panel data analysis which distinguishes between short-run and long-run effects of legal change. We find that worker-protective labour laws in general have no consistent relationship to unemployment but are positively correlated with equality. Laws relating to working time and employee representation are found to have beneficial impacts on both efficiency and distribution.

Suggested Citation

  • Simon Deakin & Jonas Malmberg & Prabirjit Sarkar, 2013. "Do Labour Laws Increase Equality at the Expense of Higher Unemployment? The Experience of Six OECD Countries, 1970-2010," Working Papers wp442, Centre for Business Research, University of Cambridge.
    • Handle: RePEc:cbr:cbrwps:wp442
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    Cited by:

    1. Simon Deakin & Colin Fenwick & Prabirjit Sarkar, 2013. "Labour Law & Inclusive Development: the Economic Effects of Industrial Relations Laws in Middle-Income Countries," Working Papers wp447, Centre for Business Research, University of Cambridge.

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    More about this item

    Keywords

    Labour law; leximetrics; inequality; unemployment;
    All these keywords.

    JEL classification:

    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • J8 - Labor and Demographic Economics - - Labor Standards
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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