Abstract

http://ssrn.com/abstract=879761
 
 

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Product Market Deregulation and the U.S. Employment Miracle


Monique Ebell


Humboldt University of Berlin - Faculty of Economics

Christian Haefke


Institute for Advanced Studies (IHS); NYU, Abu Dhabi; Institute for the Study of Labor (IZA)

January 2006

IZA Discussion Paper No. 1946

Abstract:     
We consider the dynamic relationship between product market entry regulation and equilibrium unemployment. The main theoretical contribution is combining a job matching model with monopolistic competition in the goods market and individual wage bargaining. Product market competition affects unemployment by two channels: the output expansion effect and a countervailing effect due to a hiring externality. Competition is then linked to barriers to entry. We calibrate the model to US data and perform a policy experiment to assess whether the decrease in trend unemployment during the 1980's and 1990's could be attributed to product market deregulation. Our quantitative analysis suggests that under individual bargaining, a decrease of less than two-tenths of a percentage point of unemployment rates can be attributed to product market deregulation, a surprisingly small amount.

Number of Pages in PDF File: 41

Keywords: product market competition, barriers to entry, wage bargaining

JEL Classification: E24, J63, L16, O00

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Date posted: January 30, 2006  

Suggested Citation

Ebell, Monique and Haefke, Christian, Product Market Deregulation and the U.S. Employment Miracle (January 2006). IZA Discussion Paper No. 1946. Available at SSRN: http://ssrn.com/abstract=879761

Contact Information

Monique Ebell
Humboldt University of Berlin - Faculty of Economics ( email )
Spandauer Strasse 1
D-10178 Berlin
Germany
++49-30-2093-5936 (Phone)
HOME PAGE: http://www.wiwi.hu-berlin.de/wpol/html/staff/Monique.html
Christian Haefke (Contact Author)
Institute for Advanced Studies (IHS) ( email )
Stumpergasse 56
A-1060 Vienna
Austria
NYU, Abu Dhabi ( email )
PO Box 129188
Abu Dhabi
United Arab Emirates
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
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