Product Market Deregulation and the U.S. Employment Miracle

Ebell, Monique and Haefke, Christian (May 2008) Product Market Deregulation and the U.S. Employment Miracle. Former Series > Working Paper Series > IHS Economics Series 223


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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 individualbargaining. 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 directly 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: IHS Series
Keywords: 'Product market competition' 'Barriers to entry' 'Wage bargaining'
Classification Codes (e.g. JEL): E24, J63, L16, O00
Date Deposited: 26 Sep 2014 10:38
Last Modified: 26 Sep 2019 16:34
ISBN: 1605-7996

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