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Product and Labor Market Regulations, Production Prices, Wages and Productivity

Gilbert Cette, Jimmy Lopez, Jacques Mairesse

NBER Working Paper No. 20563
Issued in October 2014, Revised in June 2015
NBER Program(s):The Productivity, Innovation, and Entrepreneurship Program

This study is an attempt to evaluate the effects of product and labour market regulations on industry productivity through their various impacts on changes in production prices and wages. In a first stage, the estimation of a regression equation on an industry*country panel, with controls for country*industry and country*year fixed effects, show that multi-factor productivity is negatively and significantly influenced by both indicators of industrial prices from same industry and weighted average of industrial prices from other industries, and by indicators of country wages weighted by industry labour shares for low and high skilled workers. In a second stage, an economic policy simulation of the implications these results on the basis of their calibration by the OECD product and labour market anti-competitive regulation indicators suggests that nearly all countries could expect sizeable gains in multifactor productivity from deregulation reforms.

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Document Object Identifier (DOI): 10.3386/w20563

Published: Gilbert Cette & Jimmy Lopez & Jacques Mairesse, 2016. "Product and Labour Market Regulations, Production Prices, Wages and Productivity," Review of Economics and Institutions, UniversitĂ  di Perugia, vol. 7(2). citation courtesy of

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