Market Regulations, Prices, and Productivity

• DOI: 10.1257/aer.p20161025
• Publication Date: 2016-05-12T05:45:04Z
• Authors: Gilbert Cette; Jimmy Lopez; Jacques Mairesse
• Keywords: JEL: O - Economic Development; 330; anti-competitive regulations; o47 - "Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence"; and Growth/O.O4 - Economic Growth and Aggregate Productivity/O.O4.O43 - Institutions and Growth; and Growth/O.O4 - Economic Growth and Aggregate Productivity/O.O4.O47 - Empirical Studies of Economic Growth • Aggregate Productivity • Cross-Country Output Convergence; p42 - "Other Economic Systems: Productive Enterprises; Factor and Product Markets; Prices; Population"; Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence; rents; market imperfections; 0502 economics and business; Other Economic Systems: Productive Enterprises; Factor and Product Markets; Prices; Population; JEL: O - Economic Development, Innovation, Technological Change, and Growth/O.O4 - Economic Growth and Aggregate Productivity/O.O4.O47 - Empirical Studies of Economic Growth • Aggregate Productivity • Cross-Country Output Convergence; JEL: L - Industrial Organization/L.L1 - Market Structure; Innovation; [SHS.ECO] Humanities and Social Sciences/Economics and Finance; g18 - General Financial Markets: Government Policy and Regulation; Productivity; JEL: C - Mathematical and Quantitative Methods/C.C2 - Single Equation Models • Single Variables/C.C2.C23 - Panel Data Models • Spatio-temporal Models; and Market Performance/L.L1.L16 - Industrial Organization and Macroeconomics: Industrial Structure and Structural Change • Industrial Price Indices; 05 social sciences; 1. No poverty; JEL: L - Industrial Organization/L.L1 - Market Structure, Firm Strategy, and Market Performance/L.L1.L16 - Industrial Organization and Macroeconomics: Industrial Structure and Structural Change • Industrial Price Indices; [SHS.ECO]Humanities and Social Sciences/Economics and Finance; Technological Change; JEL: O - Economic Development, Innovation, Technological Change, and Growth/O.O4 - Economic Growth and Aggregate Productivity/O.O4.O43 - Institutions and Growth; Firm Strategy; General Financial Markets: Government Policy and Regulation; 8. Economic growth; JEL: L - Industrial Organization/L.L5 - Regulation and Industrial Policy/L.L5.L50 - General

This study is, to our knowledge, the first attempt to infer the consequences on productivity entailed by anticompetitive regulations in product and labor markets through their impacts on production prices and wages. Results show that changes in production prices and wages at country*industry levels are informative about the creation of rents impeding productivity in different ways and to different extents. A simulation based on OECD regulation indicators suggests that nearly all countries could expect sizeable gains in multifactor productivity from the implementation of large structural reform programs changing anticompetitive regulation practices on product and labor markets.