Assessing the Long-Run Economic Impact of Labour Law Systems: A theoretical Reappraisal and Analysis of New Time Series Data

Simon Deakin and Prabirjit Sarkar ()

Working Papers from Centre for Business Research, University of Cambridge

Abstract: Standard economic theory sees labour law as an exogenous interference with market relations and predicts mostly negative impacts on employment and productivity. We argue for a more nuanced theoretical position: labour law is, at least in part, endogenous, with both the production and the application of labour law norms influenced by national and sectoral contexts, and by complementarities between the institutions of the labour market and those of corporate governance and financial markets. Legal origin may also operate as a force shaping the content of the law and its economic impact. Time-series analysis using a new dataset on legal change from the 1970s to the mid-2000s shows evidence of positive correlations between regulation and growth in employment and productivity, at least for France and Germany. No relationship, either positive or negative, is found for the UK, and although the US shows a weak negative relationship between regulation and employment growth, this is offset by productivity gains.

Keywords: labour law; employment; productivity; redistribution; complementarities; legal origins; varieties of capitalism (search for similar items in EconPapers)
JEL-codes: J83 K31 (search for similar items in EconPapers)
Date: 2008-06
New Economics Papers: this item is included in nep-eff, nep-lab, nep-law and nep-reg
Note: PRO-2
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (42)

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Working Paper: Assessing the Long-Run Economic Impact of Labour Law Systems: A Theoretical Reappraisal and Analysis of New Time Series Data (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:cbr:cbrwps:wp367

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