Labour Market Regulation in the Eu-15: Causes and Consequences - a Survey

26 Pages Posted: 26 Nov 2006

See all articles by Stanley Siebert

Stanley Siebert

Business School, University of Birmingham; IZA Institute of Labor Economics; Institute of Economic Affairs (IEA)

Date Written: November 2006


Why should floors be set under wages and working conditions by labour market regulations? This paper finds that efficiency arguments are questionable, because of the disemployment effects of strict regulation. Regulation is better explained in terms of the choices of the employed semi- and unskilled worker group. This group contains the median voter, who rationally desires strict regulation to divert rent from other groups such as the skilled workers and the unemployed. Legal origin may also be important: some countries have fallen under the influence of the interventionist French (or German) legal tradition. Given a predisposition to intervene, these countries begin with some degree of labour regulation, which then creates its own constituency of rent protectors and rent growers.

Keywords: labour market regulation, European Union, median voter, legal origin, minimum wages, working conditions floors, wage inequality, job opportunity inequality, long-term unemployment

JEL Classification: J38, J41, J58, J68, J83, K31

Suggested Citation

Siebert, Stanley, Labour Market Regulation in the Eu-15: Causes and Consequences - a Survey (November 2006). IZA Discussion Paper No. 2430, Available at SSRN:

Stanley Siebert (Contact Author)

Business School, University of Birmingham ( email )

Birmingham, B15 2TT
United Kingdom
(44) 1214146698 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

Institute of Economic Affairs (IEA) ( email )

2 Lord North Street, Westminster
London, SW1P 3LB
United Kingdom

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