Product Market Deregulation and the U.S. Employment Miracle

Monique Ebell () and Christian Haefke ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We consider the dynamic relationship between product market entry regulation andequilibrium unemployment. The main theoretical contribution is combining a job matchingmodel with monopolistic competition in the goods market and individual bargaining. Wecalibrate the model to US data and perform a policy experiment to assess whether thedecrease in trend unemployment during the 1980's and 1990's could be attributed to productmarket deregulation. Under a traditional calibration, our results suggest that a decrease of lessthan two-tenths of a percentage point of unemployment rates can be attributed to productmarket deregulation, a surprisingly small amount. Under a small surplus calibration,however, product market deregulation can account for the entire decline in US trendunemployment over the 1980's and 1990's.

Keywords: Product market competition; barriers to entry; wage bargaining (search for similar items in EconPapers)
JEL-codes: E24 J63 L16 O00 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-dge, nep-lab, nep-mac, nep-mic and nep-reg
Date: 2008-06
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Related works:
Working Paper: Product Market Deregulation and the U.S. Employment Miracle (2006)
Working Paper: Product Market Deregulation and the U.S. Employment Miracle (2008)
Working Paper: Product Market Deregulation and the U.S. Employment Miracle (2006)
Journal Article: Product Market Deregulation and the U.S. Employment Miracle (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:cep:cepdps:dp0874

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