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Financial Development, Labor and Market Regulations and Growth

  • Raquel FONSECA

    (CSEF, University of Salerno)

  • Natalia UTRERO- GONZALEZ

    (University Autonoma de Barcelona)

This paper investigates the importance that market regulation and financial imperfections have on …rm growth. We analyse institutions affecting labor market as Employment Protection Laws (EP) and Product Market Regulation (PM). We show that together with the beneficial effects of …nancial development, a firm will get less financing, and thus invest less, in a weak financial market (finance effect), the strictness of product and labor market regulations also affect firm growth (labor effect). In particular, we show that the stricter the rules the more detrimental the influence on growth in sectoral value added for a large number of countries. We also show that the labor effect overcomes the positive finance effect.

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Paper provided by EconWPA in its series Finance with number 0509016.

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Length: 30 pages
Date of creation: 12 Sep 2005
Date of revision:
Handle: RePEc:wpa:wuwpfi:0509016
Note: Type of Document - pdf; pages: 30
Contact details of provider: Web page: http://econwpa.repec.org

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