Product and labour market regulations, production prices, wages and productivity
Gilbert Cette, Jimmy Lopez & Jacques Mairesse
#2015-028
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 of 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.
JEL Classification: C23, L16, L50, O43, O47
Keywords: Productivity, market imperfections, anti-competitive regulations, rents