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Product Market Deregulation and the U.S. Employment Miracle

Monique Ebell and Christian Haefke ()

No 1946, IZA Discussion Papers from Institute of Labor Economics (IZA)

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 wage bargaining. Product market competition affects unemployment by two channels: the output expansion effect and a countervailing effect due to a hiring externality. Competition is then linked to barriers to entry. 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. Our quantitative analysis suggests that under individual bargaining, 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.

Keywords: barriers to entry; product market competition; 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-mac and nep-reg
Date: 2006-01
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Published in: Review of Economic Dynamics, 2009, 12, 479 - 504.

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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 (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 (2003) Downloads
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