Employment Protection Deregulation and Labor Shares in Advanced Economies

2020/10/30 by Gabriele Ciminelli, Romain Duval, Davide Furceri · 1 voice · 58 citations
Economics, Econometrics and Finance · Health Professions · #Deregulation #Economic growth #Economics #Efficiency wage #Elasticity of substitution #Employment and Welfare Studies #Firm Innovation and Growth #Labor market dynamics and wage inequality #Labour economics #Macroeconomics #Market economy #Production (economics) #Wage share #Workforce

paper · doi:10.1162/rest_a_00983

published in The Review of Economics and Statistics 104(6), 1174-1190 (The MIT Press)

openalex publication_date 2020/10/30 · openalex created_date 2025/10/10 · openalex updated_date 2026/06/11

Abstract

Abstract This paper assesses the impact of job protection deregulation on the labor share in a sample of 26 advanced economies during the 1970–2013 period, using a newly constructed dataset of major reforms in this area. We employ a difference-in-differences identification strategy using two identifying assumptions grounded in theory—deregulation has larger effects in industries characterized by (i) a higher “natural” propensity to regularly adjust the workforce and (ii) a lower elasticity of substitution between capital and labor. We find significant negative effects of deregulation on the labor share, contributing to about a tenth of its observed decline in advanced economies.

Citations

• Wage Differentials, Employer Size, and Unemployment
• Estimation and Inference of Impulse Responses by Local Projections
• The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks
• The Next Generation of the Penn World Table

Cited by

• Structural reforms and income distribution: new evidence for OECD countries
• Dissecting the influence of geopolitical risks on employment decisions: The role of employment protection across countries

Discussions

• Lisäksi vuonna 2022 julkaistussa tutkimuksessa havaittiin, että työsuhdeturvan heikkeneminen laski palkkojen osuutta kansantulosta 26 maassa vuosina 1970–2013. Koska pääomatulot keskittyvät suurituloi [bsky, 37 points, 0 comments]

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