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Before It Gets Better: The Short-Term Employment Costs of Regulatory Reforms

Andrea Bassanini and Federico Cingano

ILR Review, 2019, vol. 72, issue 1, 127-157

Abstract: The article exploits long time series of industry-level data in a group of OECD countries to analyze the short-term labor market effects of reforms that lower barriers to entry and dismissal costs. Estimates show that both policies induce non-negligible transitory employment losses. The strength of these effects varies depending on the underlying industry and labor market structure, and on cyclical conditions: The employment cost of deregulation is higher in economic downturns and negligible in good times. These findings prove robust to a set of specification and sensitivity checks and are confirmed after standard reverse causality and falsification tests.

Keywords: employment; short-term costs; job destruction; labor market regulation; product market regulation (search for similar items in EconPapers)
Date: 2019
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Working Paper: Before It Gets Better: The Short-Term Employment Costs of Regulatory Reforms (2017) Downloads
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Handle: RePEc:sae:ilrrev:v:72:y:2019:i:1:p:127-157