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Technology and labor regulations: theory and evidence

Alberto Alesina, Michele Battisti () and Joseph Zeira ()
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Alberto Alesina: Harvard University

Journal of Economic Growth, 2018, vol. 23, issue 1, 41-78

Abstract: Abstract This paper shows that different labor market policies can lead to differences in technology across sectors in a model of labor saving technologies. Labor market regulations reduce the skill premium and as a result, if technologies are labor saving, countries with more stringent labor regulation, which bind more for low skilled workers, become less technologically advanced in their high skill sectors, but more technologically advanced in their low skill sectors. We then present data on capital-output ratios, on estimated productivity levels and on patent creation, which tend to support the predictions of our model.

Keywords: Technology choice; Cost of labor; Skill premium; Labor regulations (search for similar items in EconPapers)
JEL-codes: J31 J50 O33 (search for similar items in EconPapers)
Date: 2018
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