Resource title

The employment effects of labor and product markets deregulation and their implications for structural reform

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Resource description

This study explores the effects of labor and product market deregulation on employment growth. Our empirical results, based on an OECD country panel from 1990-2004, suggest that lower levels of product and labor market regulation foster employment growth, including through sizable interaction effects. Based on these findings, the paper develops a theoretical framework for evaluating deregulation strategies in the presence of reform costs. Optimal deregulation takes various forms depending on the deregulation costs and the strength of reform interactions. Compared to the first best, decentralized decision-making based on a partial market-by-market perspective can lead to excessive or insufficient regulation, depending on the design of the decision process. Securing the first best requires not only coordinating deregulation activities across sectors but also overcoming the partial perspective of decision makers.

Resource author

Helge Berger, Stephan Danninger

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/25754

Resource license

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