The impact of labor market deregulation on productivity: a panel data analysis of 19 OECD countries (1960-2004)

Mainstream economists argue that unemployment can be reduced by deregulation of labor markets, that is, by easier firing, reduction of minimum wages and social benefits, and so forth. Our panel data analysis shows that wage-cost saving flexibilization of labor markets has a negative impact on labor...

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Bibliographic Details
Published inJournal of post Keynesian economics Vol. 33; no. 2; pp. 371 - 408
Main Authors Vergeer, Robert, Kleinknecht, Alfred
Format Journal Article
LanguageEnglish
Published Abingdon Routledge 01.12.2010
M. E. Sharpe
M.E. Sharpe, Inc
Taylor & Francis Ltd
SeriesJournal of Post Keynesian Economics
Subjects
Cross-national analysis
Data analysis
Deregulation
Economic growth models
Employment
employment growth
Europe
flexible labor
Gross domestic product
Growth capital
Growth rates
Industrialized nations
Labor economics
Labor market
labor market deregulation
Labor markets
Labor productivity
labor productivity growth
Labour market
Labour productivity
Panel data
Productivity
Productivity growth
Productivity measurement
Real wages
Studies
Technological innovation
wage policy
Europe
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Summary:Mainstream economists argue that unemployment can be reduced by deregulation of labor markets, that is, by easier firing, reduction of minimum wages and social benefits, and so forth. Our panel data analysis shows that wage-cost saving flexibilization of labor markets has a negative impact on labor productivity growth. A one percentage point change in growth rates of real wages leads to a change in labor productivity growth by 0.31-0.39 percentage points. This cannot solely be explained by hiring low-productive labor. Flexibilization of labor markets leads to a labor-intensive growth path that is problematic with an aging population in Europe.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0160-3477
1557-7821
DOI:10.2753/PKE0160-3477330208