Labor and Product Market Deregulation: Partial, Sequential, or Simultaneous Reform?

Helge Berger and Stephan Danninger

No 2005/227, IMF Working Papers from International Monetary Fund

Abstract: This study explores the effects of labor and product market deregulation on employment growth. Our empirical results, based on an OECD country panel from 1990-2004, suggest that lower levels of product and labor market regulation foster employment growth, including through sizable interaction effects. Based on these findings, the paper develops a theoretical framework for evaluating deregulation strategies in the presence of reform costs. Optimal deregulation takes various forms depending on the deregulation costs, the strength of reform interactions, and the perspective of the policymaker. Unless deregulation costs are very asymmetric across markets, optimal deregulation requires some form of coordination.

Keywords: WP; labor market regulation; employment growth; temporary employment (search for similar items in EconPapers)
Pages: 35
Date: 2005-12-01
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Citations: View citations in EconPapers (20)

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