Product market deregulation and the U.S. employment miracle

Ebell, Monique and Haefke, Christian (2008) Product market deregulation and the U.S. employment miracle. CEPDP, 874. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 9780853282815

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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 bargaining. 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. Under a traditional calibration, our results suggest that 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. Under a small surplus calibration, however, product market deregulation can account for the entire decline in US trend unemployment over the 1980's and 1990's.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk
Additional Information:	© 2008 the authors
Uncontrolled Keywords:	Product market competition, barriers to entry, wage bargaining
Library of Congress subject classification:	H Social Sciences > HD Industries. Land use. Labor
Journal of Economic Literature Classification System:	L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L16 - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure; Industrial Price Indices E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E24 - Macroeconomics: Employment; Unemployment; Wages; Intergenerational Income Distribution (includes wage indexation) J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J63 - Turnover; Vacancies; Layoffs
Sets:	Collections > Economists Online Research centres and groups > Centre for Economic Performance (CEP)
Rights:	http://www.lse.ac.uk/library/rights/LSERO.htm
Identification Number:	874
URL:	http://eprints.lse.ac.uk/19569/

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