Assessing the impact of labour market policies on productivity: a difference-in differences approach

Publication type

Research Paper

Series Number

54

Series

OECD Social, Employment and Migration Working Papers

Authors

Publication date

June 1, 2007

Abstract:

The impact of four labour market policies - employment protection legislation, minimum wages, parental leave and unemployment benefits - on productivity is examined here, using annual cross-country aggregate data on these policies and industry-level data on productivity from 1979 to 2003. We use a 'difference-in-differences' framework, which exploits likely differences in the productivity effect of policies in different industries. Our identifying assumption is that a specific policy influences worker or firm behaviour, and thereby productivity, more in industries where the policy in question is likely to be more binding than in other industries. The advantage of this approach is twofold. First, as in standard cross-country analysis, we can exploit the cross-country variation of policies. Second, in contrast with standard cross-country analysis, we can control for unobserved factors that, on average, are likely to have the same effect on productivity in both policy-binding and non-binding industries.

Subjects

Link

- http://www.oecd.org/dataoecd/27/20/38797288.pdf

Notes

OECD search

working paper

#510993

News

Latest findings, new research

Publications search

Search all research by subject and author

Podcasts

Researchers discuss their findings and what they mean for society

Projects

Background and context, methods and data, aims and outputs

Events

Conferences, seminars and workshops

Survey methodology

Specialist research, practice and study

Taking the long view

ISER's annual report

Themes

Key research themes and areas of interest