IMF Staff Papers

, Volume 54, Issue 3, pp 591–619 | Cite as

The Employment Effects of Labor and Product Market Deregulation and Their Implications for Structural Reform

  • Helge Berger
  • Stephan Danninger
Article
First Online:

Abstract

This study explores the effects of labor and product market deregulation on employment growth. Our empirical results, based on an Organization for Economic Cooperation and Development country sample from 1990 to 2004, suggest that lower levels of product and labor market regulation foster employment growth, including through sizable interaction effects. Based on these findings, the paper discusses a theoretical framework 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 with the first-best policy, decentralized decision making can lead to excessive or insufficient deregulation.

JEL Classifications

L51 E24 J50 
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Copyright information

© International Monetary Fund 2007

Authors and Affiliations

  • Helge Berger
  • Stephan Danninger

There are no affiliations available

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