Resource title

Employment Protection, Product Market Competition and Growth

Resource image

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Resource description

It is commonly argued that labor market institutions such as employment protection worsen an economy?s performance and particularly so, if product markets become more competitive. Empirical evidence, however, has difficulties to detect a robust negative correlation between employment protection and growth. We show in a model with step-by-step innovations that whether employment protection decreases incentives to innovate and thus productivity growth depends on the degree of product market competition. For reasonable parameter values product market deregulation fosters growth substantially more in the flexible than in the constrained economy.

Resource author

Winfried Koeniger

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/21374

Resource license

Adapt according to the presented license agreement and reference the original author.