Template-Type: ReDIF-Paper 1.0
Author-Name: Claudio Lucifora
Author-X-Name-First: Claudio
Author-X-Name-Last: Lucifora
Author-Email: claudio.lucifora@unicatt.it
Author-Workplace-Name: Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore
Author-Name: Simone Moriconi
Author-X-Name-First: Simone
Author-X-Name-Last: Moriconi
Author-Email: simone.moriconi@unicatt.it
Author-Workplace-Name: Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore
Title: Policy Myopia and Labour Market Institutions
Abstract: In the public debate, poor employment performance has often been associated with
the existence of extensive labour market regulations and a lack of commitment to far-
sighted public policies. This paper investigates the relation between policy myopia and
labour market institutions. We develop a theoretical model in which policy myopia
leads an incumbent government to choose institutions that allow the creation of rents in
the labour market and reduce resources available to public goods provision and social
expenditure. We test these predictions empirically using panel data for 21 OECD
countries for the period 1985{2006. We show that policy myopia is associated with
more regulated labour markets, lower unemployment benet replacement rates, and
smaller tax wedges on labour.
Length: 41
Creation-Date: 2014-06
File-URL: http://dipartimenti.unicatt.it/economia-finanza-def0013.pdf
File-Format: Application/pdf
File-Function: First version, 2014
Number: def0013
Classification-JEL: J64, J88, H11
Keywords: Policy myopia, public good provision, labour market institutions
Handle: RePEc:ctc:serie1:def0013