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Policy Myopia and Labour Market Institutions

Author

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  • Claudio Lucifora

    (Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)

  • Simone Moriconi

    (Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)

Abstract

In the public debate, poor employment performance has often been associated with the existence of extensive labour market regulations and a lack of commitment to far- sighted public policies. This paper investigates the relation between policy myopia and labour market institutions. We develop a theoretical model in which policy myopia leads an incumbent government to choose institutions that allow the creation of rents in the labour market and reduce resources available to public goods provision and social expenditure. We test these predictions empirically using panel data for 21 OECD countries for the period 1985{2006. We show that policy myopia is associated with more regulated labour markets, lower unemployment bene t replacement rates, and smaller tax wedges on labour.

Suggested Citation

  • Claudio Lucifora & Simone Moriconi, 2014. "Policy Myopia and Labour Market Institutions," DISCE - Working Papers del Dipartimento di Economia e Finanza def013, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
  • Handle: RePEc:ctc:serie1:def013
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    References listed on IDEAS

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    More about this item

    Keywords

    Policy myopia; public good provision; labour market institutions;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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