Employment Effects of Product and Labour Market Reforms: Are There Synergies?


  • Corresponding author: Giuseppe Fiori, Universidade of São Paulo - FEA Departamento de Economia, Avenida Prof. Luciano Gualberto, 908 - Prédio FEA 2 - CEP 05508-090 Cidade Univera, São Paulo - SP, Brazil. Email: giuseppefiori@gmail.com.

  • We thank two referees, Alberto Alesina, Silvia Ardagna, Andrea Bassandni, Tito Boeri, Pierre Cahuc, Daniele Checchi, Alain de Serres, Romain Duval, Francesco Giavazzi, Arthur Lewbel, John Martin, Jan Svejnar, Kathy Terrell, the participants of the NBER Political Economy programme meeting (Cambridge, MA, 4 May 2007), of the IZA - Fondazione Rodolfo De Benedetti Conference on ‘Measurement of Labor Market Institutions’ (Bonn 4 July 2007) of the 3rd Annual World Bank - IZA Conference on ‘Employment and Development’ (Rabat, 5–6 May 2008) and participants of seminars at OECD, the European University Institute, University of Bologna, University of Milan, University of Rome ‘La Sapienza’ and Bank of Italy for useful comments and suggestions. The opinions expressed in the article are those of the authors and do not engage the OECD or its member countries.


This article investigates the effect of product market liberalisation on employment allowing for interactions between policies and institutions in product and labour markets. Using panel data for OECD countries over the period 1980–2002, we present evidence that product market deregulation is more effective at the margin when labour market regulation is high. The data also suggest that product market liberalisation may promote employment-enhancing labour market reforms.