Unemployment Impact of Product and Labor Market Regulation: Evidence from European Countries

Céline Piton and Francois Rycx

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: This paper provides robust estimates of the impact of both product and labor market regulations on unemployment using data from 24 European countries over the period 1998-2013. Controlling for country fixed effects, endogeneity, and a large set of covariates, results show that product market deregulation overall reduces the unemployment rate. This finding is robust across all specifications and in line with theoretical predictions. However, not all types of reforms have the same effect: deregulation of state controls and in particular involvement in business operations tend to push up the unemployment rate. Labor market deregulation, proxied by the employment protection legislation index, is detrimental to unemployment in the short run, while a positive impact (i.e. a reduction in the unemployment rate) occurs only in the long run. Analysis by sub-indicators shows that reducing protection against collective dismissals helps in reducing the unemployment rate. The unemployment rate equation is also estimated for different categories of workers. Although men and women are equally affected by product and labor market deregulations, workers distinguished by age and educational attainment are affected differently. In terms of employment protection, young workers are almost twice as strongly affected as older workers. Regarding product market deregulation, highly educated individuals are less impacted than low- and middle-educated workers.

Keywords: employment protection; labor market; product market; regulation; structural reform; unemployment (search for similar items in EconPapers)
Date: 2019-09
Note: SCOPUS: ar.j
References: Add references at CitEc
Citations:

Published in: IZA Journal of Labor Policy (2019) v.9 n° 1

Downloads: (external link)
https://dipot.ulb.ac.be/dspace/bitstream/2013/296648/1/doi_280292.pdf Full text for the whole work, or for a work part (application/pdf)

Related works:
Journal Article: Unemployment Impact of Product and Labor Market Regulation: Evidence from European Countries (2019)
Working Paper: The Unemployment Impact of Product and Labour Market Regulation: Evidence from European Countries (2018)
Working Paper: The unemployment impact of product and labour market regulation: evidence from European countries (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ulb:ulbeco:2013/296648

Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... lb.ac.be:2013/296648

Access Statistics for this paper

More papers in ULB Institutional Repository from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().