European Parliament Library

Product Market Regulation and the Benefits of Wage Moderation, Marcello Estevão

Abstract
Euro-area real wages have decelerated sharply in the last 20 years, but this has not yet translated into visibly lower unemployment or faster growth. Weak output growth after such a cost shock is somewhat puzzling and has led some to question the benefits of wage moderation. By isolating structural from cyclical factors in a panel of industrial countries, I show that structurally slower real wage growth, that is, "wage moderation," does raise output growth and lower unemployment rates. However, I show that the impact on both variables depends crucially on product market regulation: weaker competition and barriers to entry mute the growth effects of structural real wage changes by allowing incumbent firms to appropriate larger rents. In this context, overly regulated product markets in the euro area are undermining the effects of labor market reforms on output and employment
Table Of Contents
""Contents""; ""I. INTRODUCTION""; ""II. LABOR COST CHANGES AND ECONOMIC PERFORMANCE IN THE RAW DATA""; ""III. WAGE- SETTING BEHAVIOR AND ECONOMIC PERFORMANCE""; ""IV. MEASURING THE BENEFITS OF WAGE MODERATION""; ""V. CONCLUSIONS AND FINAL REMARKS""; ""THE OECD PRODUCT MARKET REGULATION DATA""; ""References""
Language
eng
Literary Form
non fiction
Note
Description based upon print version of record
Physical Description
1 online resource (30 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9780145190743

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