Product Market Regulation and Market Work: A Benchmark Analysis; by Lei Fang, Richard Rogerson
نویسندگان
چکیده
Recent empirical work finds a negative correlation between product market regulation and aggregate employment. We examine the effect of product market regulations on hours worked in a benchmark aggregate model of time allocation. We find that product market regulations affect time devoted to market work in effectively the same fashion as do taxes on labor income or consumption. In particular, if product market regulations are to affect aggregate market work in this model the key driving force is the size of income transfers associated with the regulation relative to labor income, and the key propagation mechanism is the labor supply elasticity. We show in a two sector model that industry level analysis is of little help in assessing the aggregate effects of product market regulation. Lei Fang Department of Economics Arizona State University Tempe AZ 85287 [email protected] Richard Rogerson Department of Economics College of Business Arizona State University Tempe, AZ 85287 and NBER [email protected]
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