American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Do Labor Market Rigidities Have Microeconomic Effects? Evidence from within the Firm
American Economic Journal: Applied Economics
vol. 1,
no. 2, April 2009
(pp. 88–127)
Abstract
We exploit a unique outlet-level dataset from a multinational chain with over 2,500 outlets in 43 countries to investigate the effects of labor regulations that protect employment. The dataset contains information on output, materials, and labor costs at a weekly frequency over several years, allowing us to examine the consequences of labor market rigidity at a much more detailed level than has been possible to date. We find that higher labor market rigidity is associated with significantly higher levels of hysteresis. We also find some evidence that labor costs are less responsive to sales revenue in more highly regulated markets. (JEL: E24, J08, J23, K31, M51)Citation
Lafontaine, Francine, and Jagadeesh Sivadasan. 2009. "Do Labor Market Rigidities Have Microeconomic Effects? Evidence from within the Firm." American Economic Journal: Applied Economics, 1 (2): 88–127. DOI: 10.1257/app.1.2.88Additional Materials
JEL Classification
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
- J08 Labor Economics Policies
- J23 Labor Demand
- K31 Labor Law
- M51 Personnel Economics: Firm Employment Decisions; Promotions
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