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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 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 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 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
References: View references in EconPapers View complete reference list from CitEc
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http://cep.lse.ac.uk/pubs/download/dp0874.pdf (application/pdf)

Related works:
Journal Article: Product Market Deregulation and the U.S. Employment Miracle (2009) Downloads
Working Paper: Product market deregulation and the U.S. employment miracle (2008) Downloads
Working Paper: Product Market Deregulation and the U.S. Employment Miracle (2008) Downloads
Working Paper: Product Market Deregulation and the U.S. Employment Miracle (2006) Downloads
Working Paper: Product market deregulation and the U.S. employment miracle (2006) Downloads
Working Paper: Product Market Deregulation and the U.S. Employment Miracle (2003) Downloads
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