Do Labour Laws Increase Equality at the Expense of Higher Unemployment? The Experience of Six OECD Countries, 1970-2010

Centre for Business Research, University of Cambridge Working Paper No. 442

28 Pages Posted: 28 Oct 2013

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

Jonas Malmberg

Uppsala University

Prabirjit Sarkar

University of Cambridge

Multiple version iconThere are 2 versions of this paper

Date Written: June 2013

Abstract

Using longitudinal data on labour law in France, Germany, Japan, Sweden, the UK and the USA for the four decades after 1970, we estimate the impact of labour regulation on unemployment and equality, using labour’s share of national income as a proxy for the latter. We employ a dynamic panel data analysis which distinguishes between short-run and long-run effects of legal change. We find that worker-protective labour laws in general have no consistent relationship to unemployment but are positively correlated with equality. Laws relating to working time and employee representation are found to have beneficial impacts on both efficiency and distribution.

Keywords: income distribution, labour law, unemployment rate, long-term unemployment, youth unemployment

JEL Classification: K31, J08, J50, J60, J83

Suggested Citation

Deakin, Simon F. and Malmberg, Jonas and Sarkar, Prabirjit, Do Labour Laws Increase Equality at the Expense of Higher Unemployment? The Experience of Six OECD Countries, 1970-2010 (June 2013). Centre for Business Research, University of Cambridge Working Paper No. 442. Available at SSRN: https://ssrn.com/abstract=2345821 or http://dx.doi.org/10.2139/ssrn.2345821

Simon F. Deakin

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

Top Floor, Judge Business School Building
Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+ 44 1223 335243 (Phone)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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

University of Cambridge - Faculty of Law ( email )

10 West Road
Cambridge, CB3 9DZ
United Kingdom

Jonas Malmberg

Uppsala University ( email )

Box 513
Uppsala, 751 20
Sweden

Prabirjit Sarkar (Contact Author)

University of Cambridge ( email )

Centre for Business Research
Cambridge, CB2 1AG
United Kingdom

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