Impact of Labour Regulation on Unemployment: A Case Study of France, Germany, UK and USA

Sarkar, Prabirjit (2011): Impact of Labour Regulation on Unemployment: A Case Study of France, Germany, UK and USA.

Abstract

This paper examines the state of labour protection in four countries (UK, USA, France and Germany) during 1970-2006. It supports the contention of the legal-origin theory that UK and USA (common law countries) intervene less in the labour market and grant less protection to labourers. It also supports the proposition that the problem of unemployment is more acute in the civil law countries (France and Germany). But it finds no direct relationship between various aspects of labour regulation and unemployment rate. Hence, we conclude that the explanation of more acute unemployment problem in France and Germany should be sought elsewhere.

• Item Type: MPRA Paper
• Language: English
• Keywords: law and economics; labour law; legal origin theory; unemployment rate; long-term unemployment; youth unemployment
• Subjects: J - Labor and Demographic Economics > J8 - Labor Standards: National and International > J80 - General; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J60 - General; K - Law and Economics > K3 - Other Substantive Areas of Law > K31 - Labor Law; J - Labor and Demographic Economics > J5 - Labor-Management Relations, Trade Unions, and Collective Bargaining > J50 - General

References

Beck T., Demirgüc-Kunt A. and Levine R. “Law and finance: why does legal origin matter?” Journal of Comparative Economics 31(2003a): 653-675.

Beck T., Demirgüc-Kunt A. and Levine R. “Law, endowments and finance.” Journal of Financial Economics 70(2003b): 137-181.

Blackburne III, Edward F. and Frank, M. W. “Estimation of non-stationary heterogeneous panels.” The Stata Journal 7(2007): 197-208.

Botero J., Djankov S., La Porta R., Lopez-de-Silanes F. and Shleifer A. “The regulation of labour.” Quarterly Journal of Economics 119(2004): 1339-1382.

Djankov S., Glaeser E., La Porta R., Lopez-de-Silanes F. and Shleifer A. “The new comparative economics.” Journal of Comparative Economics 31(2003): 595-619.

Djankov, S., La Porta, R., Lopez-de-Silanes, F. and Shleifer, A. “The law and economics of self-dealing.” Journal of Financial Economics 88(2008): 430–65.

Glaeser E. and Shleifer A. “Legal origins.” Quarterly Journal of Economics 117(2002): 1193-1229.

Glaeser E. and Shleifer A. “The rise of the regulatory state.” Journal of Economic Literature 41(2003): 401-425.

IMF (2003) ‘Unemployment and labour market institutions: why reforms pay off’, in IMF (ed.) World Economic Outlook, Chapter 4 (Washington, DC: International Monetary Fund).

La Porta R., Lopez-de-Silanes F., Shleifer A. and Vishny R. “Legal determinants of external finance.” Journal of Finance 52(1997): 1131-1150.

La Porta R., Lopez-de-Silanes F., Shleifer A. and Vishny R. “Law and finance” Journal of Political Economy 106 (1998): 1113-55.

La Porta R., Lopez-de-Silanes F. and Shleifer A. “Corporate ownership around the world.” Journal of Finance 54(1999): 471-517.

La Porta R., Lopez-de-Silanes F., Shleifer A. and Vishny R. “Agency problems and dividend policies around the world.” Journal of Finance 55(2000): 1-33.

La Porta R., Lopez-de-Silanes F., and Shleifer, A. “What works in securities laws?” Journal of Finance 61(2006): 1-32.

La Porta, R., Lopez-de-Silanes, F. and Shleifer, A. “The economic consequences of legal origins.” Journal Economic Literature 46(2008): 285–332.

Milhaupt, Curtis J. and Katharina Pistor. Law & Capitalism: What Corporate Crises Reveal about Legal Systems and Economic Development around the World. Chicago and London: University of Chicago Press, 2008.

North, D. Institutions, Institutional Change, and Economic Performance. Cambridge: Cambridge University Press, 1990.

OECD. OECD Jobs Study, Evidence and Explanations, Part I: Labour Market Trends and Underlying Forces of Change. Paris: Organization for Economic Cooperation and Development, 1994.

OECD (2004) Employment Outlook. Paris: Organization for Economic Cooperation and Development, 2004.

Pesaran, M. H., Y. Shin, and R. P. Smith. “Pooled mean group estimation of dynamic heterogeneous panels.” Journal of the American Statistical Association 94(1995): 621-634.

Pesaran, M. H., and R. P. Smith. “Estimating long-run relationships from dynamic heterogeneous panels.” Journal of Econometrics 68(1995): 79-113.

World Bank (2008a) Doing Business 2008: Comparing Regulation in 178 Economies (Washington, DC: International Bank for Reconstruction and Development).