This paper investigates the economics of ”blue laws” or restrictions on shop-opening hours, most commonly imposed on Sunday trading. We show that in the presence of communal leisure or ”ruinous competition” externalities, retail regulations can have real effects in a simple general equilibrium model. We look for these effects in a panel of US states and in individual CPS data. An instrumental variable approach identifies the effects to the extent that blue laws are endogenous. We find that blue laws 1) reduce relative employment, 2) raise annual compensation and labor productivity, and 3) depress prices in the retail sector. The primary mechanism appears to be a reduction of part-time employment.
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- Sanyal, Kalyan K & Jones, Ronald W, 1982. "The Theory of Trade in Middle Products," American Economic Review, American Economic Association, vol. 72(1), pages 16-31, March.
- Raymond Gradus, 1996. "The economic effects of extending shop opening hours," Journal of Economics, Springer, vol. 64(3), pages 247-263, October.
- Clemenz, Gerhard, 1990. "Non-sequential consumer search and the consequences of a deregulation of trading hours," European Economic Review, Elsevier, vol. 34(7), pages 1323-1337, November.
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- Thum, Marcel & Weichenrieder, Alfons, 1997. "'Dinkies' and Housewives: The Regulation of Shopping Hours," Kyklos, Wiley Blackwell, vol. 50(4), pages 539-59.
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