Product Market Deregulation and the U.S. Employment Miracle

Monique Ebell () and Christian Haefke ()

No 223, Economics Series from Institute for Advanced Studies

Abstract: We consider the dynamic relationship between product market entry regulation and equilibrium unemployment. The main theoretical contribution is combining a job matching model with monopolistic competition in the goods market and individual bargaining. We calibrate the model to US data and perform a policy experiment to assess whether the decrease in trend unemployment during the 1980’s and 1990’s could be directly attributed to product market deregulation. Under a traditional calibration, our results suggest that a decrease of less than two-tenths of a percentage point of unemployment rates can be attributed to product market deregulation, a surprisingly small amount. Under a small surplus calibration, however, product market deregulation can account for the entire decline in US trend unemployment 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 O00 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-dge, nep-ent, nep-lab, nep-mac, nep-mic and nep-reg
Date: 2008-05
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http://www.ihs.ac.at/publications/eco/es-223.pdf First version, 2008 (application/pdf)

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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