This paper examines the impact of labour and product market reforms on sectoral employment
and productivity, following a difference-in-differences approach. Using industry-level data for the
period 1997-2013, we show that employment protection deregulation has a positive effect on
sectoral employment for industries more exposed to labour market legislation, despite having a
non-positive impact on productivity. Upstream product market deregulation also increases
sectoral employment for the downstream ...
This paper examines the impact of labour and product market reforms on sectoral employment
and productivity, following a difference-in-differences approach. Using industry-level data for the
period 1997-2013, we show that employment protection deregulation has a positive effect on
sectoral employment for industries more exposed to labour market legislation, despite having a
non-positive impact on productivity. Upstream product market deregulation also increases
sectoral employment for the downstream sectors more dependent on upstream inputs.
Nevertheless, it has mixed effects on sectoral productivity: while upstream sectors face
productivity losses, the downstream sectors more exposed to the deregulated sectors grasp
productivity gains.
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