IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_6407.html
   My bibliography  Save this paper

Regulation, Institutions, and Productivity: New Macroeconomic Evidence from OECD Countries

Author

Listed:
  • Balazs Egert

Abstract

Empirical research on the drivers of multi-factor productivity (MFP) is abundant at the firm- and industry level but surprisingly little research has been conducted on the determinants of MFP at the macroeconomic level. In this paper, we seek to understand the drivers of country-level MFP with a special emphasis on product and labour market policies and the quality of institutions. For a panel of OECD countries, we find that anticompetitive product market regulations are associated with lower MFP levels and that higher innovation intensity and greater openness go in tandem with higher MFP. We also find that the impact of product market regulations on MFP may depend on the level of labour market regulations. Better institutions, a more business friendly environment and lower barriers to trade and investment amplify the positive impact of R&D spending on MFP. Finally, we also show that cross-country MFP variations can be explained to a considerable extent by cross-country variation in labour market regulations, barriers to trade and investment and institutions (including corruption).

Suggested Citation

  • Balazs Egert, 2017. "Regulation, Institutions, and Productivity: New Macroeconomic Evidence from OECD Countries," CESifo Working Paper Series 6407, CESifo.
    • Handle: RePEc:ces:ceswps:_6407
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp6407.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Dreher, Axel & Kotsogiannis, Christos & McCorriston, Steve, 2007. "Corruption around the world: Evidence from a structural model," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 443-466, September.
    2. Gilbert Cette & Jimmy Lopez & Jacques Mairesse, 2017. "Upstream Product Market Regulations, ICT, R&D and Productivity," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63, pages 68-89, February.
    3. Horvath, Roman, 2011. "Research & development and growth: A Bayesian model averaging analysis," Economic Modelling, Elsevier, vol. 28(6), pages 2669-2673.
    4. Dan Andrews & Ben Westmore, 2014. "Managerial Capital and Business R&D as Enablers of Productivity Convergence," OECD Economics Department Working Papers 1137, OECD Publishing.
    5. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-365, June.
    6. Dan Andrews & Chiara Criscuolo, 2013. "Knowledge-Based Capital, Innovation and Resource Allocation: A Going for Growth Report," OECD Economic Policy Papers 4, OECD Publishing.
    7. Dan Andrews & Federico Cingano, 2014. "Public policy and resource allocation: evidence from firms in Oecd countries [‘Joseph Schumpeter Lecture. Appropriate growth policy: a unifying framework]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 29(78), pages 253-296.
    8. Peter Gal & Adam Theising, 2015. "The macroeconomic impact of structural policies on labour market outcomes in OECD countries: A reassessment," OECD Economics Department Working Papers 1271, OECD Publishing.
    9. 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).
    10. Ben Westmore, 2013. "R&D, Patenting and Growth: The Role of Public Policy," OECD Economics Department Working Papers 1047, OECD Publishing.
    11. Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
    12. Giuseppe Nicoletti & Stefano Scarpetta, 2003. "Regulation, productivity and growth: OECD evidence [‘A model of growth through creative destruction’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 18(36), pages 9-72.
    13. Roman Horváth, 2011. "Research & Development and Long-Term Economic Growth: A Bayesian Model Averaging Analysis," Working Papers IES 2011/19, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jun 2011.
    14. Peter N. Gal, 2013. "Measuring Total Factor Productivity at the Firm Level using OECD-ORBIS," OECD Economics Department Working Papers 1049, OECD Publishing.
    15. Kao, Chihwa, 1999. "Spurious regression and residual-based tests for cointegration in panel data," Journal of Econometrics, Elsevier, vol. 90(1), pages 1-44, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Balázs Egert, 2017. "The Impact Of Regulations And Institutions On Multi-Factor Productivity: New Evidence From Macroeconomic Estimates," Working Papers hal-04141653, HAL.
    2. Balazs Egert, 2022. "Public policy reforms and their impact on productivity, investment and employment: new evidence from OECD and non-OECD countries," Public Sector Economics, Institute of Public Finance, vol. 46(2), pages 179-205.
    3. Aurelien Quignon, 2022. "Market Regulation and Innovation: Direct and Indirect Effects," Journal of Industry, Competition and Trade, Springer, vol. 22(3), pages 429-456, December.
    4. Balázs Égert, 2018. "Regulation, Institutions and Aggregate Investment: New Evidence from OECD Countries," Open Economies Review, Springer, vol. 29(2), pages 415-449, April.
    5. Ciriaci, Daria & Grassano, Nicola & Vezzani, Antonio, 2019. "Regulations and location choices of top R&D investors worldwide," Structural Change and Economic Dynamics, Elsevier, vol. 49(C), pages 29-42.
    6. Balázs Égert, 2017. "Aggregate multi-factor productivity: Measurement issues in OECD countries," OECD Economics Department Working Papers 1441, OECD Publishing.
    7. Paul Conway, 2016. "Achieving New Zealand's productivity potential," Working Papers 2016/01, New Zealand Productivity Commission.
    8. Balázs Egert, 2018. "Aggregate multi-factor productivity: measurement issues in OECD countries," Working Papers hal-04141781, HAL.
    9. Themann, Michael & Koch, Nicolas, 2021. "Catching up and falling behind: Cross-country evidence on the impact of the EU ETS on firm productivity," Ruhr Economic Papers 904, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    10. Mehmet Balcilar & Ojonugwa Usman & George N. Ike, 2023. "Investing green for sustainable development without ditching economic growth," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(2), pages 728-743, April.
    11. Ms. Lusine Lusinyan, 2018. "Assessing the Impact of Structural Reforms Through a Supply-side Framework: The Case of Argentina," IMF Working Papers 2018/183, International Monetary Fund.
    12. Balázs Égert & Peter Gal, 2017. "The quantification of structural reforms in OECD countries: A new framework," OECD Journal: Economic Studies, OECD Publishing, vol. 2016(1), pages 91-108.
    13. James Broughel & Robert W. Hahn, 2022. "The impact of economic regulation on growth: Survey and synthesis," Regulation & Governance, John Wiley & Sons, vol. 16(2), pages 448-469, April.
    14. Masayuki Morikawa, 2023. "Compliance costs and productivity: an approach from working hours," Journal of Regulatory Economics, Springer, vol. 63(3), pages 117-137, June.
    15. Broughel, James & Hahn, Robert, 2020. "The Impact of Economic Regulation on Growth: Survey and Synthesis," Working Papers 10409, George Mason University, Mercatus Center.
    16. MARSCHINSKI Robert & DE AMORES HERNANDEZ Antonio & AMOROSO Sara & BAUER Peter & CARDANI Roberta & CSEFALVAY Zoltan & GENTY Aurelien & GKOTSIS Petros & GREGORI Wildmer & GRASSANO Nicola & HERNANDEZ GUE, 2021. "EU competitiveness: recent trends, drivers, and links to economic policy: A Synthesis Report," JRC Research Reports JRC123232, Joint Research Centre.
    17. Balázs Egert, 2017. "Regulation, Institutions and Productivity: New Macroeconomic Evidence From OECD Countries," Working Papers hal-04141655, HAL.
    18. Jakob de Haan & Rasmus Wiese, 2022. "The impact of product and labour market reform on growth: Evidence for OECD countries based on local projections," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 37(4), pages 746-770, June.
    19. Alessandro Saia & Dan Andrews & Silvia Albrizio, 2015. "Productivity Spillovers from the Global Frontier and Public Policy: Industry-Level Evidence," OECD Economics Department Working Papers 1238, OECD Publishing.
    20. Albrizio, Silvia & Kozluk, Tomasz & Zipperer, Vera, 2017. "Environmental policies and productivity growth: Evidence across industries and firms," Journal of Environmental Economics and Management, Elsevier, vol. 81(C), pages 209-226.

    More about this item

    Keywords

    multi-factor productivity; trade openness; innovation; product market regulation; labour market regulation; institutions; policy interactions; OECD;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_6407. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.