The unemployment impact of product and labour market regulation: evidence from European countries

Céline Piton and Francois Rycx

No 18-023, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: This paper provides robust estimates of the impact of both product and labour market regulations on unemployment using data for 24 European countries over the period 1998-2013. Controlling for country-fixed effects, endogeneity and a large set of covariates, results show that product market deregulation overall reduces the unemployment rate. This finding is robust across all specifications and in line with theoretical predictions. However, not all types of reforms have the same effect: deregulation of state controls and in particular involvement in business operations tends to push up the unemployment rate. Labour market deregulation, proxied by the employment protection legislation index, is detrimental to unemployment in the short run while a positive impact (i.e. a reduction of the unemployment rate) occurs only in the long run. Analysis by sub-indicators shows that reducing protection against collective dismissals helps in reducing the unemployment rate. The unemployment rate equation is also estimated for different categories of workers. While men and women are equally affected by product and labour market deregulations, workers distinguished by age and by educational attainment are affected differently. In terms of employment protection, young workers are almost twice as strongly affected as older workers. Regarding product market deregulation, highly-educated individuals are less impacted than low- and middle-educated workers.

Keywords: Unemployment; Structural reform; Product market; Labour market; Regulation; Employment Protection (search for similar items in EconPapers)
JEL-codes: E24 E60 J48 J64 L51 (search for similar items in EconPapers)
Pages: 34 p.
Date: 2018-06-04
New Economics Papers: this item is included in nep-eec, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published by:

Downloads: (external link)
https://dipot.ulb.ac.be/dspace/bitstream/2013/271461/3/wp18023.pdf Œuvre complète ou partie de l'œuvre (application/pdf)

Related works:
Journal Article: Unemployment Impact of Product and Labor Market Regulation: Evidence from European Countries (2019)
Working Paper: The Unemployment Impact of Product and Labour Market Regulation: Evidence from European Countries (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sol:wpaper:2013/271461

Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... lb.ac.be:2013/271461

Access Statistics for this paper

More papers in Working Papers CEB from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().