The employment effects of labor and product markets deregulations and their implications for structural reform

Helge Berger () and Stephan Danninger

No 2006/10, Discussion Papers from Free University Berlin, School of Business & Economics

Abstract: This study explores the effects of market deregulation on employment growth. Empirical analysis of an OECD country panel (1990-2004) suggests that lower levels of product and labor market regulation foster employment growth, including through sizable interaction effects. A theoretical framework is developed for evaluating deregulation strategies in the presence of reform costs. Optimal deregulation takes various forms depending on the deregulation costs and the strength of reform interactions. Compared to the first best, decentralized decision-making can lead to excessive or insufficient deregulation. Securing the first best requires coordinating deregulation activities across sectors and overcoming the partial perspective of decision makers.

Keywords: Product market regulation; labor market regulation; employment growth; policy coordination; sequencing (search for similar items in EconPapers)
JEL-codes: E24 J50 L51 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (10)

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Related works:
Journal Article: The Employment Effects of Labor and Product Market Deregulation and Their Implications for Structural Reform (2007)
Working Paper: The Employment Effects of Labor and Product Markets Deregulation and their Implications for Structural Reform (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:fubsbe:200610

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