TY  - JOUR
AU  - Fang,Lei
AU  - Rogerson,Richard
TI  - Product Market Regulation and Market Work: A Benchmark Analysis
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12891
PY  - 2007
Y2  - February 2007
UR  - http://www.nber.org/papers/w12891
L1  - http://www.nber.org/papers/w12891.pdf
N1  - Author contact info:
Lei Fang
Department of Economics
Arizona State University
Tempe AZ 85287
E-Mail: lei.fang.1@asu.edu

Richard Rogerson
Woodrow Wilson School of
  Public and International Affairs
323 Bendheim Hall
Princeton University
Princeton, NJ 08544
Tel: 609-258-4839
Fax: 609-258-5349
E-Mail: rdr@princeton.edu
AB  - Recent empirical work finds a negative correlation between product market regulation and aggregate employment. We examine the effect of product market regulations on hours worked in a benchmark aggregate model of time allocation. We find that product market regulations affect time devoted to market work in effectively the same fashion as do taxes on labor income or consumption. In particular, if product market regulations are to affect aggregate market work in this model the key driving force is the size of income transfers associated with the regulation relative to labor income, and the key propagation mechanism is the labor supply elasticity. We show in a two sector model that industry level analysis is of little help in assessing the aggregate effects of product market regulation.
ER  -