| Abstract [eng] |
This paper examines the impact of labor market regulation on productivity in European Union countries for the period 2012-2022. The aim of the study is to determine how the level of labor market regulation affects productivity in European Union countries, after analyzing the scientific literature on labor market regulation and productivity and conducting an empirical study. Given that labor market regulation can be measured by various indicators – the Employment Protection Legislation Index (EPL), the density of trade unions and collective agreements, the World Bank’s Doing Business Labor Market Regulation Index, etc., this paper chose to use the labor market regulation index provided in the Fraser Institute’s Index of Economic Freedom of the World. The study used annual data for European Union countries for the period 2012-2022, and the impact of labor market regulation on productivity is assessed using regression analysis. The study consists of 3 parts. The theoretical part discusses the concept of the labor market, its regulation and productivity. Next, the theoretical part conducts a literature analysis in order to examine the main factors that have a significant impact on productivity. The second part of the study presents the research methodology, which provides a research action plan, research methods and an empirical evaluation model. Next, the data sources of the analyzed indicators are indicated, the research sample and period are justified. The third part presents the dynamics of the indicators analyzed in the study for the period 2012-2022 in the European Union, and at the end of the empirical part, a regression analysis is presented, which aims to verify the research hypotheses. When performing the regression analysis, separate models are created in which productivity is measured by two indicators - as an index of real productivity per hour and as the value of output per hour (measured in 2021 international dollars according to PPP), and labor market regulation is reflected by the general labor market regulation index calculated by the Freaser Institute and sub-indices of this index. The results of the study showed that in the period under analysis, when evaluating data from 27 European Union countries, the extension of working hours has a negative impact on productivity, and there is a positive statistically significant relationship between wages and productivity - faster wage growth can stimulate productivity growth. It was also studied that the increasing share of value added created in the industrial sector in GDP is associated with faster productivity growth, while the increase in the share of investment in fixed assets in GDP reduces productivity. When assessing the impact of labor market regulation on productivity, it was found that in the period under analysis, the level of labor market regulation does not have a statistically significant impact on productivity. However, the liberalization of labor rules and minimum wage regulation and working hours rules is associated with productivity growth. |
