IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_849.html
   My bibliography  Save this paper

Labour Market Performance and Start-up Costs: OECD Evidence

Author

Listed:
  • Paloma Lopez-Garcia

Abstract

This paper is intended to make a contribution to the empirical literature explaining the rise of unemployment since the 1970s in western economies by means of interactions between shocks and institutions. The contribution is twofold. First, the impact of a general feature of developed economies that has been surprisingly neglected in the literature is analyzed, namely, the employment shift from industry and agriculture to services. The second contribution of the paper is the focus on the interaction of that shock with the administrative burdens on firm creation. The working hypotheses is that countries that impose high costs on the creation of new companies are not able to create enough jobs in the service sector to successfully absorb the workers released from the agriculture and industry sector. The result is higher unemployment.

Suggested Citation

  • Paloma Lopez-Garcia, 2003. "Labour Market Performance and Start-up Costs: OECD Evidence," CESifo Working Paper Series 849, CESifo.
    • Handle: RePEc:ces:ceswps:_849
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo_wp849.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Stefano Scarpetta & Philip Hemmings & Thierry Tressel & Jaejoon Woo, 2002. "The Role of Policy and Institutions for Productivity and Firm Dynamics: Evidence from Micro and Industry Data," OECD Economics Department Working Papers 329, OECD Publishing.
    2. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2002. "The Regulation of Entry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 1-37.
    3. Giuseppe Nicoletti & Stefano Scarpetta & Olivier Boylaud, 2000. "Summary Indicators of Product Market Regulation with an Extension to Employment Protection Legislation," OECD Economics Department Working Papers 226, OECD Publishing.
    4. Bernard, Andrew B & Jones, Charles I, 1996. "Productivity across Industries and Countries: Time Series Theory and Evidence," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 135-146, February.
    5. Siebert, Horst, 1997. "Labor market rigidities and unemployment in Europe," Kiel Working Papers 787, Kiel Institute for the World Economy (IfW Kiel).
    6. Piyabha Kongsamut & Sergio Rebelo & Danyang Xie, 2001. "Beyond Balanced Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(4), pages 869-882.
    7. Baumol, William J & Blackman, Sue Anne Batey & Wolff, Edward N, 1985. "Unbalanced Growth Revisited: Asymptotic Stagnancy and New Evidence," American Economic Review, American Economic Association, vol. 75(4), pages 806-817, September.
    8. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages 1-33, March.
    9. Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, vol. 115(500), pages 1-27, January.
    10. Lopez-Garcia, Paloma, 2002. "Labour market performance and start-up costs: OECD evidence," LSE Research Online Documents on Economics 20059, London School of Economics and Political Science, LSE Library.
    11. Marimon, Ramon & Zilibotti, Fabrizio, 1998. "'Actual' versus 'virtual' employment in Europe Is Spain different?," European Economic Review, Elsevier, vol. 42(1), pages 123-153, January.
    12. Edward P. Lazear, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(3), pages 699-726.
    13. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
    14. Piyabha Kongsamut & Sergio Rebelo & Danyang Xie, 2001. "Beyond Balanced Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(4), pages 869-882.
    15. David Metcalf & S Milner & G Nombela, 1995. "Employment Protection Legislation and Labour Market Outcomes in Spain," CEP Discussion Papers dp0244, Centre for Economic Performance, LSE.
    16. Victor R. Fuchs, 1968. "The Service Economy," NBER Books, National Bureau of Economic Research, Inc, number fuch68-1.
    17. Bernard, Andrew B & Jones, Charles I, 1996. "Comparing Apples to Oranges: Productivity Convergence and Measurement across Industries and Countries," American Economic Review, American Economic Association, vol. 86(5), pages 1216-1238, December.
    18. Horst Siebert, 1997. "Labor Market Rigidities: At the Root of Unemployment in Europe," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 37-54, Summer.
    19. Michael Bruno & Jeffrey D. Sachs, 1985. "Economics of Worldwide Stagflation," NBER Books, National Bureau of Economic Research, Inc, number brun85-1.
    20. Mr. Sergio Rebelo & Ms. Piyabha Kongsamut & Danyang Xie, 2001. "Beyond Balanced Growth," IMF Working Papers 2001/085, International Monetary Fund.
    21. repec:bla:econom:v:53:y:1986:i:210(s):p:s1-22 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Paloma Lopez-Garcia, 2002. "Labour Market Performance and Start-Up Costs: OECD Evidence," CEP Discussion Papers dp0565, Centre for Economic Performance, LSE.
    2. Christopher A. Pissarides, 2003. "Unemployment in Britain: A European Success Story," CESifo Working Paper Series 981, CESifo.
    3. Lei Fang & Richard Rogerson, 2011. "Product Market Regulation and Market Work: A Benchmark Analysis," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(2), pages 163-188, April.
    4. Ruta Aidis & Tomasz Mickiewicz, 2006. "Entrepreneurs, expectations and business expansion: Lessons from Lithuania," Europe-Asia Studies, Taylor & Francis Journals, vol. 58(6), pages 855-880.
    5. repec:hal:wpspec:info:hdl:2441/9081 is not listed on IDEAS
    6. repec:spo:wpecon:info:hdl:2441/9081 is not listed on IDEAS
    7. Christopher Pissarides & Pietro Garibaldi & Claudia Olivetti & Barbara Petrongolo & Etienne Wasmer, 2003. "Women in the Labour Force: How Well is Europe Doing?," Post-Print hal-03588626, HAL.
    8. Linzert, Tobias, 2005. "The Unemployment Inflation Trade-Off in the Euro Area," IZA Discussion Papers 1699, Institute of Labor Economics (IZA).
    9. Lei Fang & Richard Rogerson, 2009. "Policy Analysis In A Matching Model With Intensive And Extensive Margins," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(4), pages 1153-1168, November.
    10. Jan J. Rutkowski & Stefano Scarpetta, 2005. "Enhancing Job Opportunities : Eastern Europe and the Former Soviet Union," World Bank Publications - Books, The World Bank Group, number 7408.
    11. Ruta Aidis & Tomasz Marek Mickiewicz, 2005. "Growth expectations of business owners: impact of human capital, firm characteristics and environmental transition," UCL SSEES Economics and Business working paper series 50, UCL School of Slavonic and East European Studies (SSEES).
    12. Winfried Koeniger & Julien Prat, 2007. "Employment Protection, Product Market Regulation and Firm Selection," Economic Journal, Royal Economic Society, vol. 117(521), pages 302-332, June.
    13. D'Agostino, Antonello & Serafini, Roberta & Ward-Warmedinger, Melanie E., 2006. "Sectoral Explanations of Employment in Europe: The Role of Services," IZA Discussion Papers 2257, Institute of Labor Economics (IZA).
    14. repec:spo:wpmain:info:hdl:2441/9081 is not listed on IDEAS
    15. Rutkowski, Jan, 2004. "Firms, jobs, and employment in Moldova," Policy Research Working Paper Series 3253, The World Bank.
    16. Raquel Fonseca & Natalia Utrero González, 2004. "Do Market Regulation and Financial Imperfections Affect Firm Size? New Empirical Evidence," CSEF Working Papers 119, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    17. repec:hal:spmain:info:hdl:2441/9081 is not listed 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. Gayle Allard & Peter H. Lindert, 2006. "Euro-Productivity and Euro-Jobs since the 1960s: Which Institutions Really Mattered?," NBER Working Papers 12460, National Bureau of Economic Research, Inc.
    2. D'Agostino, Antonello & Serafini, Roberta & Ward-Warmedinger, Melanie E., 2006. "Sectoral Explanations of Employment in Europe: The Role of Services," IZA Discussion Papers 2257, Institute of Labor Economics (IZA).
    3. Linzert, Tobias, 2005. "The Unemployment Inflation Trade-Off in the Euro Area," IZA Discussion Papers 1699, Institute of Labor Economics (IZA).
    4. Howell David R. & Baker Dean & Glyn Andrew & Schmitt John, 2007. "Are Protective Labor Market Institutions at the Root of Unemployment? A Critical Review of the Evidence," Capitalism and Society, De Gruyter, vol. 2(1), pages 1-73, May.
    5. Dietrich, Andreas & Krüger, Jens J., 2010. "Numerical explorations of the Ngai-Pissarides model of growth and structural change," Darmstadt Discussion Papers in Economics 199, Darmstadt University of Technology, Department of Law and Economics.
    6. Messina, Julian, 2006. "The role of product market regulations in the process of structural change," European Economic Review, Elsevier, vol. 50(7), pages 1863-1890, October.
    7. Raquel Fonseca & Natalia Utrero González, 2004. "Do Market Regulation and Financial Imperfections Affect Firm Size? New Empirical Evidence," CSEF Working Papers 119, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    8. Andrea Bassanini & Romain Duval, 2006. "The Determinants of Unemployment across OECD Countries," Post-Print halshs-00120584, HAL.
    9. Jahn, Elke J., 2005. "Wie wirkt der Kündigungsschutz? (What are the effects of employment protection?)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(2/3), pages 284-304.
    10. Christopher A. Pissarides, 2003. "Unemployment in Britain: A European Success Story," CESifo Working Paper Series 981, CESifo.
    11. Fedderke, Johannes W., 2018. "Exploring unbalanced growth: Understanding the sectoral structure of the South African economy," Economic Modelling, Elsevier, vol. 72(C), pages 177-189.
    12. John T. Addison & Orgul Demet Ozturk, 2012. "Minimum Wages, Labor Market Institutions, and Female Employment: A Cross-Country Analysis," ILR Review, Cornell University, ILR School, vol. 65(4), pages 779-809, October.
    13. Alfred Stiglbauer, 2006. "The (New) OECD Jobs Study: Introduction and Assessment," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 58-74.
    14. Rainer Fehn & Carsten-Patrick Meier, 2001. "The Positive Economics of Labor Market Rigidities and Investor Protection," CESifo Working Paper Series 456, CESifo.
    15. Richard Rogerson, 2008. "Structural Transformation and the Deterioration of European Labor Market Outcomes," Journal of Political Economy, University of Chicago Press, vol. 116(2), pages 235-259, April.
    16. Murat Ungor, 2017. "Productivity Growth and Labor Reallocation: Latin America versus East Asia," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 24, pages 25-42, March.
    17. Sener, Fuat, 2006. "Labor market rigidities and R&D-based growth in the global economy," Journal of Economic Dynamics and Control, Elsevier, vol. 30(5), pages 769-805, May.
    18. Dosi, G. & Pereira, M.C. & Roventini, A. & Virgillito, M.E., 2017. "When more flexibility yields more fragility: The microfoundations of Keynesian aggregate unemployment," Journal of Economic Dynamics and Control, Elsevier, vol. 81(C), pages 162-186.
    19. Raquel FONSECA & Natalia UTRERO- GONZALEZ, 2005. "Financial Development, Labor and Market Regulations and Growth," Finance 0509016, University Library of Munich, Germany.
    20. Emiliano Brancaccio & Fabiana De Cristofaro & Raffaele Giammetti, 2020. "No Consensus In The Imf-Oecd 'Consensus': A Meta-Analysis On The Employment Impact Of Labour Deregulations," Working Papers 445, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.

    More about this item

    Keywords

    macroeconomics of unemployment; panel data; start-up costs;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • K2 - Law and Economics - - Regulation and Business Law
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

    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:_849. 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.