01931cas a2200241 a 4500 AALejournalIMF003811 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451862102 1018-5941 BD-DhAAL BD-DhAAL Estevao, Marcello. Product Market Regulation and the Benefits of Wage Moderation / Marcello Estevao. Washington, D.C. : International Monetary Fund, 2005. 1 online resource (30 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Euro-area real wages have decelerated sharply in the last 20 years, but this has not yet translated into visibly lower unemployment or faster growth. Weak output growth after such a cost shock is somewhat puzzling and has led some to question the benefits of wage moderation. By isolating structural from cyclical factors in a panel of industrial countries, I show that structurally slower real wage growth, that is, "wage moderation," does raise output growth and lower unemployment rates. However, I show that the impact on both variables depends crucially on product market regulation: weaker competition and barriers to entry mute the growth effects of structural real wage changes by allowing incumbent firms to appropriate larger rents. In this context, overly regulated product markets in the euro area are undermining the effects of labor market reforms on output and employment. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2005/191 Full text available on IMF http://elibrary.imf.org/view/journals/001/2005/191/001.2005.issue-191-en.xml IMF e-Library