Regulation, Institutions, and Productivity: New Macroeconomic Evidence from OECD Countries
No 6407, CESifo Working Paper Series from CESifo Group Munich
Empirical research on the drivers of multi-factor productivity (MFP) is abundant at the firm- and industry level but surprisingly little research has been conducted on the determinants of MFP at the macroeconomic level. In this paper, we seek to understand the drivers of country-level MFP with a special emphasis on product and labour market policies and the quality of institutions. For a panel of OECD countries, we find that anticompetitive product market regulations are associated with lower MFP levels and that higher innovation intensity and greater openness go in tandem with higher MFP. We also find that the impact of product market regulations on MFP may depend on the level of labour market regulations. Better institutions, a more business friendly environment and lower barriers to trade and investment amplify the positive impact of R&D spending on MFP. Finally, we also show that cross-country MFP variations can be explained to a considerable extent by cross-country variation in labour market regulations, barriers to trade and investment and institutions (including corruption).
Keywords: multi-factor productivity; trade openness; innovation; product market regulation; labour market regulation; institutions; policy interactions; OECD (search for similar items in EconPapers)
JEL-codes: C23 C51 J20 L43 L51 O40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff, nep-ino and nep-tid
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Working Paper: Regulation, Institutions and Productivity: New Macroeconomic Evidence from OECD Countries (2017)
Working Paper: Regulation, institutions and productivity: New macroeconomic evidence from OECD countries (2017)
Journal Article: Regulation, Institutions, and Productivity: New Macroeconomic Evidence from OECD Countries (2016)
Working Paper: Regulation, institutions and productivity: new macroeconomic evidence from OECD countries (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6407
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