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The Economic Consequences of Labor Market Regulations

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  • Jesus Fernandez-Villaverde

    (Department of Economics, University of Pennsylvania)

Abstract

What do we know about the economic consequences of labor market regulations? Few economic policy questions are as contentious as labor market regulations. The effects of minimum wages, collective bargaining provisions, and hiring/firing restrictions generate heated debates in the U.S. and other advanced economies. And yet, establishing empirical lessons about the consequences of these regulations is surprisingly difficult. In this paper, I explain some of the reasons why this is the case, and I critically review the recent findings regarding the effects of minimum wages on employment. Contrary to often asserted statements, the preponderance of the evidence still points toward a negative impact of permanently high minimum wages.

Suggested Citation

  • Jesus Fernandez-Villaverde, 2016. "The Economic Consequences of Labor Market Regulations," PIER Working Paper Archive 16-027, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 28 Dec 2016.
    • Handle: RePEc:pen:papers:16-027
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    More about this item

    Keywords

    Labor market regulations; minimum wages; job creation and job destruction;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)

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