Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/107278
Authors: 
Bertola, Giuseppe
Prete, Anna Lo
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper 5206
Abstract: 
We analyze the implications of labor market reforms for an open economy's human capital investment and future production. A stylized model shows that labor market deregulation can imply more positive current account balances if financial markets are imperfect and labor market institutions not only distort labor allocation, but also smooth income. Empirically, in OECD country-level panel data, we find that labor market deregulation has been positively related to current account surpluses on average and more strongly so when and where financial market access was more limited. These results are robust to inclusion of standard determinants of current account imbalances, and do not appear to be driven by cyclical phenomena.
Subjects: 
labor market deregulation
precautionary savings
JEL: 
F40
J68
Document Type: 
Working Paper

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