Assessing the Long-Run Economic Impact of Labour Law Systems: A Theoretical Reappraisal and Analysis of New Time Series Data

70 Pages Posted: 6 Oct 2008

See all articles by Simon Deakin

Simon Deakin

University of Cambridge - Centre for Business Research (CBR); European Corporate Governance Institute (ECGI); University of Cambridge - Faculty of Law

Prabirjit Sarkar

University of Cambridge

Multiple version iconThere are 2 versions of this paper

Date Written: October 3, 2008

Abstract

Standard economic theory sees labour law as an exogenous interference with market relations and predicts mostly negative impacts on employment and productivity. We argue for a more nuanced theoretical position: labour law is, at least in part, endogenous, with both the production and the application of labour law norms influenced by national and sectoral contexts, and by complementarities between the institutions of the labour market and those of corporate governance and financial markets. Legal origin may also operate as a force shaping the content of the law and its economic impact. Time-series analysis using a new dataset on legal change from the 1970s to the mid-2000s shows evidence of positive correlations between regulation and growth in employment and productivity, at least for France and Germany. No relationship, either positive or negative is found for the UK and although the US shows a weak negative relationship between regulation and employment growth, this is offset by productivity gains.

Keywords: labour law, employment, productivity, redistribution, complementarities, legal origins, varieties of capitalism

JEL Classification: K31, J83

Suggested Citation

Deakin, Simon F. and Sarkar, Prabirjit, Assessing the Long-Run Economic Impact of Labour Law Systems: A Theoretical Reappraisal and Analysis of New Time Series Data (October 3, 2008). CLPE Research Paper No. 30/2008. Available at SSRN: https://ssrn.com/abstract=1278006 or http://dx.doi.org/10.2139/ssrn.1278006

Simon F. Deakin (Contact Author)

University of Cambridge - Centre for Business Research (CBR) ( email )

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Cambridge, CB2 1AG
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+ 44 1223 335243 (Phone)

European Corporate Governance Institute (ECGI)

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B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

University of Cambridge - Faculty of Law ( email )

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Cambridge, CB3 9DZ
United Kingdom

Prabirjit Sarkar

University of Cambridge ( email )

Centre for Business Research
Cambridge, CB2 1AG
United Kingdom

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