NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Technology and Labor Regulations: Theory and Evidence

Alberto Alesina, Michele Battisti, Joseph Zeira

NBER Working Paper No. 20841
Issued in January 2015
NBER Program(s):Development Economics

This paper shows that different labor market policies can lead to differences in technology across sectors in a model of labor saving technologies. Labor market regulations reduce the skill premium and as a result, if technologies are labor saving, countries with more stringent labor regulation, which are binding for low skilled workers, become less technologically advanced in their high-skilled sectors, and more technologically advanced in their low-skilled sectors. We then present data on capital output ratios, on estimated productivity levels and on patent creation, which support the predictions of our model.

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Document Object Identifier (DOI): 10.3386/w20841

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