182 - Are Product and Labour Market Reforms Mutually Reinforcing?

DNB Working Papers
Date 23 September 2008

This paper analyses the relationship between product market competition and labour market institutions in a general equilibrium context. It concludes that an increase in product market competition, enhanced .exibility of labour supply, social security reform and a reduction in union bargaining power are mutually re-inforcing (in terms of their employment impact) in some, but not all cases. This stresses the need for an extremely careful design of such reforms. JEL codes: E24, E52, J50. Key words: labour market regulation, wage bargaining.