The impact of labour market regulation on the unemployment rate: Evidence from OECD economies

Bilal Rafi

Research Paper 3/2017 |

Using data for the OECD economies, this paper investigates the relationship between labour market regulation and the unemployment rate. The results indicate that increasing the flexibility of labour market regulation via reforms can result in reductions in the unemployment rate. This average effect across all OECD member countries, however, is relatively small. Younger labour market participants, those aged 15–24 have more to gain in terms of employment opportunities as a result of flexibility enhancing labour market regulation reforms.

JEL Codes: E24, J53, L51

Keywords: Labour market regulation, unemployment, OECD