Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70741
Authors: 
Fang, Lei
Rogerson, Richard
Year of Publication: 
2009
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 2009-7
Abstract: 
Recent empirical work finds a negative correlation between product market regulation and aggregate employment. We examine the effect of product market regulations on hours worked in a benchmark aggregate model of time allocation as well as in a standard dynamic model of entry and exit. We find that product market regulations affect time devoted to market work in effectively the same fashion that taxes on labor income or consumption do. In particular, if product market regulations are to affect aggregate market work in this model, the key driving force is the size of income transfers associated with the regulation relative to labor income, and the key propagation mechanism is the labor supply elasticity. We show in a two-sector model that industry-level analysis is of little help in assessing the aggregate effects of product market regulation.
Subjects: 
labor supply
product market regulation
entry barriers
JEL: 
E24
J22
L5
Document Type: 
Working Paper

Files in This Item:
File
Size
291.36 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.