Paper by alumnus Gabriele Ciminelli accepted for The Review of Economics and Statistics
This paper assesses the impact of job protection deregulation on the labor share in a sample of 26 advanced economies during the 1970-2013 period, using a newly constructed dataset of major reforms in this area. We employ a difference-indifferences identification strategy using two identifying assumptions grounded in theory – deregulation has larger effects in industries characterized by (i) a higher ‘natural’ propensity to regularly adjust the workforce, and (ii) a lower elasticity of substitution between capital and labor. We find significant negative effects of deregulation on the labor share, contributing to about a tenth of its observed decline in advanced economies.
Gabriele Ciminelli, Romain Duval and Davide Furceri, “Employment Protection Deregulation and Labor Shares in Advanced Economies”, The Review of Economics and Statistics, https://doi.org/10.1162/rest_a_00983.