DP5988 Structural Reforms and Growth: Product and Labor Market Deregulations

Author(s): Sylvester C W Eijffinger, Alberto Rossi
Publication Date: December 2006
Keyword(s): employment, growth, IMD competitiveness index, productivity, regulation, unemployment, wages
JEL(s): D24, E24, J50, L16
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=5988

The paper focuses on labor and product market deregulations, as fundamental elements in the passage from an investment to an innovation-based economy. The approach undertaken is prominently empirical. After a very brief description of the regulatory levels on the two sides of the Atlantic, we take two cornerstone theoretical models: one developed by Robert Gordon (1997), the other developed by Blanchard and Giavazzi (2003) and we observe how well their theoretical predictions are supported by hard data. We conclude with an independent study on the accuracy of the IMD competitiveness index in predicting the overall economic performance of countries close to the technological frontier.