The Economic Consequences of Labor Market Reglations

21 Pages Posted: 22 Mar 2017

See all articles by Jesús Fernández-Villaverde

Jesús Fernández-Villaverde

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: December 28, 2016

Abstract

What do we know about the economic consequences of labor market regulations? Few economic policy questions are as contentious as labor market regulations. The effects of minimum wages, collective bargaining provisions, and hiring/hiring restrictions generate heated debates in the U.S. and other advanced economies. And yet, establishing empirical lessons about the consequences of these regulations is surprisingly difficult. In this paper, I explain some of the reasons why this is the case, and I critically review the recent findings regarding the effects of minimum wages on employment. Contrary to often asserted statements, the preponderance of the evidence still points toward a negative impact of permanently high minimum wages.

Keywords: Labor market regulations, minimum wages, job creation and job destruction

JEL Classification: J01, J08, E30

Suggested Citation

Fernández-Villaverde, Jesús, The Economic Consequences of Labor Market Reglations (December 28, 2016). PIER Working Paper No. 16-027. Available at SSRN: https://ssrn.com/abstract=2937931 or http://dx.doi.org/10.2139/ssrn.2937931

Jesús Fernández-Villaverde (Contact Author)

University of Pennsylvania - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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