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Regulation in the Network Sectors: Impact on the Innovation Process and the Employment Rate

Author

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  • Océane Vernerey

    (LEDi - Laboratoire d'Economie de Dijon [Dijon] - UBE - Université Bourgogne Europe)

  • Jimmy Lopez

    (UBE - Université Bourgogne Europe)

Abstract

We investigate both the innovation and labor market effects of network sector regulation in a consistent framework. The estimated impact of regulation on the innovation process is based on the Community Innovation Survey and a system of equations modelling the firm's choice of R&D expenditure, propensity to innovate, and performance. We then examine the regulation and innovation impact on the labor market using the European Union Labor Force Survey. From a sample of 330,604 firms and 8,594,055 individuals over the period 1998-2016 and five countries that have undergone important reforms (the Czech Republic, Hungary, Portugal, Slovakia and Spain), we find a strong negative effect of network regulation on firms' performance and individuals' employment probability. According to our estimates, the overall impact of the reforms implemented would be an average increase in the employment probability of 12.8%, almost entirely explained by an increase in firms' performance.

Suggested Citation

  • Océane Vernerey & Jimmy Lopez, 2026. "Regulation in the Network Sectors: Impact on the Innovation Process and the Employment Rate," Post-Print hal-05536453, HAL.
    • Handle: RePEc:hal:journl:hal-05536453
    DOI: 10.1057/s41294-025-00273-1
    Note: View the original document on HAL open archive server: https://hal.science/hal-05536453v1
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    References listed on IDEAS

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    1. Nauro F. Campos & Paul De Grauwe & Yuemei Ji, 2025. "Structural Reforms and Economic Performance: The Experience of Advanced Economies," Journal of Economic Literature, American Economic Association, vol. 63(1), pages 111-163, March.
    2. Giuseppe Nicoletti & Stefano Scarpetta, 2005. "Product Market Reforms and Employment in OECD Countries," OECD Economics Department Working Papers 472, OECD Publishing.
    3. Renaud Bourlès & Gilbert Cette & Jimmy Lopez & Jacques Mairesse & Giuseppe Nicoletti, 2013. "Do Product Market Regulations In Upstream Sectors Curb Productivity Growth? Panel Data Evidence For OECD Countries," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1750-1768, December.
    4. Guglielmo Barone & Federico Cingano, 2011. "Service Regulation and Growth: Evidence from OECD Countries," Economic Journal, Royal Economic Society, vol. 121(555), pages 931-957, September.
    5. Océane Vernerey, 2026. "A reexamination of the firm innovation process: sensitivity to sample and estimation methods," Post-Print hal-05536446, HAL.
    6. Kevin J. Fox & 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.
    7. Campos, Nauro F. & De Grauwe, Paul & Ji, Yuemei, 2025. "Structural reforms and economic performance: the experience of advanced economies," LSE Research Online Documents on Economics 120870, London School of Economics and Political Science, LSE Library.
    8. Amable, Bruno & Ledezma, Ivan & Robin, Stéphane, 2016. "Product market regulation, innovation, and productivity," Research Policy, Elsevier, vol. 45(10), pages 2087-2104.
    9. Bruno Amable & Ivan Ledezma & Stéphane Robin, 2016. "Product market regulation, innovation, and productivity," Post-Print hal-03691909, HAL.
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