Product market deregulation and labor market outcomes
Monique Ebell and
Christian Haefke ()
Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra
We consider the dynamic relationship between product market entry regulation and equilibrium unemployment. The main theoretical contribution is combining a Mortensen-Pissarides model with monopolistic competition in the goods market and individual wage bargaining. Product market competition affects unemployment via two channels: the output expansion effect and a countervailing effect due to a hiring externality. Competition is then linked to barriers to entry. A calibrated model compares a high-regulation European regime to a low-regulation Anglo-American one. Our quantitative analysis suggests that under individual bargaining, no more than half a percentage point of European unemployment rates can be attributed to entry regulation.
Keywords: Product market competition; barriers to entry; wage bargaining; European Unemployment Puzzle (search for similar items in EconPapers)
JEL-codes: E24 J63 L16 O00 (search for similar items in EconPapers)
Date: 2002-12, Revised 2003-12
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Working Paper: Product Market Deregulation and Labor Market Outcomes (2003)
Working Paper: Product Market Deregulation and Labor Market Outcomes (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:726
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