Measures of regulation on labor and product markets
(chart
4.2)
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The measure of labor market regulation gauges the extent of
regulations governing the hiring and firing of workers—often termed
employment protection legislation. It is a summary measure that ranges
from 0 (no restrictions) to 6 (very restrictive). The following factors
are considered: the extent of procedural requirements that employers
must follow in individual or collective dismissals, notice and severance
pay requirements, and the degree of regulation on temporary forms of
employment.
The measure of product market regulation is based on a simple average of
indicators for seven industries, where each industry is rated from 0 (no
restrictions) to 6 (very restrictive). The industries are gas, electricity,
postal and courier activities, telecommunications, air transport, railways, and
road freight. Depending on the industry, the following factors are considered:
barriers to entry, public ownership, market structure, vertical integration, and
price controls.
Both indicators are constructed by OECD from a variety of national sources as well as
from multi-country surveys. The construction of these summary measures involves
difficult choices of quantification and weighting. For further information on
these choices, see the source documents.
Source: OECD, Employment and Labour Market Statistics Database and Conway, P., V.
Janod and G. Nicoletti, "Product Market Regulation in OECD Countries, 1998 to
2003," OECD Economics Department Working Paper No 419, 2005, <http://www.oecd.org/>.
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