Supply-side labour market reforms: a neglected cause of the productivity crisis

Supply-side labour market reforms: a neglected cause of the productivity crisis
In spite of impressive stories about a Second Machine Age or Industry 4.0, growth rates of labor productivity in the US, Japan and Western Europe declined, during the last 10-15 years, to their lowest levels since World War II. Recent contributions on the productivity slowdown by mainstream economists produced an impressive amount of statistical data that certainly add to our understanding, but they fail addressing the negative impact of supply-side labor market reforms on innovation and productivity. I pre¬sent theoretical arguments of how labor market deregulation can negatively influence innovation and productivity growth and I review empirical evidence.