Labor Market Regulation and the Legal System

29 Pages Posted: 5 Jul 2007

See all articles by Carsten Hefeker

Carsten Hefeker

HWWA Institute of International Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Michael Neugart

Technical University of Darmstadt

Date Written: July 2007

Abstract

When enacting labor market regulation governments face courts that interpret and implement the legal code. We show that the incentives for governments for labor market reform increase with the uncertainty that is involved in the implementation of legal codes through courts. Given that judges have more discretion in common as opposed to civil law systems more reform activity as a response to crises should be observed in the former system. This finding is backed by evidence from a panel of OECD countries.

Keywords: labor market regulation, labor courts, uncertainty, unemployment

JEL Classification: D78, K31

Suggested Citation

Hefeker, Carsten and Neugart, Michael, Labor Market Regulation and the Legal System (July 2007). CESifo Working Paper Series No. 2041, Available at SSRN: https://ssrn.com/abstract=998238

Carsten Hefeker (Contact Author)

HWWA Institute of International Economics ( email )

Heimhuder Strasse 71
20347 Hamburg, DE Hamburg 20148
Germany

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

Michael Neugart

Technical University of Darmstadt ( email )

Hochschulstra├če 1
Darmstadt, 64289
Germany

HOME PAGE: http://www.vwl3.wi.tu-darmstadt.de

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