Product market deregulation and labor market outcomes

Ebell, Monique; Haefke, Christian

Product market deregulation and labor market outcomes

License

Citation

Ebell, M, Haefke, C. Product market deregulation and labor market outcomes. 2002. handle: http://hdl.handle.net/10230/507

This citation was generated automatically.

Abstract

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.