How the new market labor regulations will affect the economic growth in France?

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How the new market labor regulations will affect the economic growth in France? #0 How the new market labor regulations will affect the economic growth in France? #1 How the new market labor regulations will affect the economic growth in France? #2 How the new market labor regulations will affect the economic growth in France? #3 How the new market labor regulations will affect the economic growth in France? #4 How the new market labor regulations will affect the economic growth in France? #5 How the new market labor regulations will affect the economic growth in France? #6 How the new market labor regulations will affect the economic growth in France? #7 How the new market labor regulations will affect the economic growth in France? #8 How the new market labor regulations will affect the economic growth in France? #9

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How the new market labor regulations will affect the economic growth in France?Yanice GuigouBACHELORARBEITNr. 3825827-A eingereicht amFachhochschul-BachelorstudiengangWirtschaftswissenschaftin Oldenburgim August 2016Diese Arbeit entstand im Rahmen des GegenstandsEconomic effects of the new market labor regulation inFranceimSommersemester 2016Betreuer:Pr. Dr. Jurgens BitzerWirtschaftswissenschaftDeclarationI hereby declare and confirm that this thesis is entirely the result of my own original work. Where other sources of information have been used, they have been indicated as such and properly acknowledged. I further declare that this or similar work has not been submitted for credit elsewhere.Oldenburg, August 18, 2016Yanice GuigouContentsDeclarationiiiAbstractv1 Introduction12 The regulation theory: reasons behind regulation42.1A complex need for regulation . . . . . . . . . . . . . . . . . .42.1.1Basis for regulation . . . . . . . . . . . . . . . . . . . .42.1.2Prevent Market Failures . . . . . . . . . . . . . . . . .62.1.3The regulatory problem . . . . . . . . . . . . . . . . .62.2Regulation is not uniform . . . . . . . . . . . . . . . . . . . .7 2.3A better way to regulate . . . . . . . . . . . . . . . . . . . . .93 A link between growth and labor market regulations123.1Labor Market Regulations and Growth: Relationship and effects 123.1.1India case . . . . . . . . . . . . . . . . . . . . . . . . .123.1.2The MENA region . . . . . . . . . . . . . . . . . . . .133.1.3 OECD specificity . . . . . . . . . . . . . . . . . . . . . 14 3.2 Deregulation: growth and jobs quality . . . . . . . . . . . . . 154 How deregulation might improve growth, a French new reform184.1The new labor market reform . . . . . . . . . . . . . . . . . .18 4.2Impacts and effects of the law . . . . . . . . . . . . . . . . . .205 Conclusion23References26Literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26Online sources. . . . . . . . . . . . . . . . . . . . . . . . . . . . .28AbstractRegulations are often criticized by firms or economists as an obstruction to the market and to the economy growth. Moreover, regulations on markets, as tedious as the market labor, can bring disastrous effect on the economy, if not managed well. In this paper, we will take a look on the theory of regulations and first show that regulations on the market labor hamper in most cases economy growth, with the help of cross-analysis and regulation theory. Afterward, we try to take a closer look to France and their new market labor law and show that the effects bring by the new deregulation might be positive in certain assumptions.Chapter 1IntroductionRegulations are a way to prevent failures in markets, they are determined by the government or the institutions that manage the markets in order to solve problems that may arise in them. Therefore, the need for regulation is strongly linked to the analysis of the chosen market and its behavior.In fact, the labor market has many market failures, some of them are social and others structural. The former corresponds to wages inequality. In fact, wages inequality can be found in many situations such as between women and men or between low skilled job and high skilled one. Most of the wages inequality are not the fault of the workers. This is why the country needs to reduce wages inequality between people to maximize the utilitarian social welfare.The latter is due to the fact that there is no complete employment in the labor market, so it needs to be regulated. This is what Keynes have shown in its classical theory. The labor market have frictional unemployment that can only be reduced if there is state intervention. Moreover, theories such as the wage-setting price-setting have also determined other forms of labor market failures. So we can say that everything show a need for regulation in the labor market.[7]On the other hand, too much regulations can bring about another problem which is state failure. In fact, a state failure happens when a market, which is regulated by the government, create other social or economical injustice, more inefficiency or more inequity. Hence, we call a market in that situation over regulated and should be in need of deregulation.[43]Because it is a country well-known for its social policies around the world and for its regulations on markets, we chose to look at France. These regulations are numerous and have many effects on every market of the economy. They are so numerous that some economists are afraid that it could crush the economy just after the economy slump.[44] In fact, the social policies compound of a wide panel of laws and regulations aimed to: a complete and total medical fees coverage that may be expensive or cheap, to a strong so-11. Introduction2cial protection for an employee against its employer, to a social protection against unemployment and even to pension after retirement. Therefore, we can clearly say that, in France, people are well protected and are more equal whether they are rich or poor.[42]However, right wing politicians and economists criticize those regulations and point it at as the reason behind the slow economic activity of those two last decades.[44] They say that the markets are over-regulated and the people are overprotected which lead to State failure. In fact, the reasons presented are numerous like the real cost that are induced due to social taxes or company taxes. Hence, the foreign and national firms show their concern about the opacity and the administrative weight that can be produced by the respect of each administrative procedures.Moreover, Philp Bruce and Wheatley Dan have also stated that the work-time regulation of 35 hours per week in France have depressed real wages and contributed to underemployment.[1]In fact, although in some countries a company can fire someone with no hassle, in France you need to fill in piles of papers, forms and procedures, give a thoughtful and legitimate reason from the point of view of the law to fire someone. And at the end, you still hope that the fired will not sue you to the court for abusive and inappropriate firing reason.All those real and hidden costs are due to the social protection of the employee in the labor market in France. This is why some say that companies do not want to stay in France and try to establish themselves somewhere else where the grass is greener.[45]So a company need to balance out the costs for staying and the costs for moving out to another country. But, as the costs to stay tend to be heavier years after years in France, the costs to move out have tremendously decrease. In the world, the transport costs by boats and the continuously low oil price allow to companies, with the low labor costs in developing countries, to gain a higher marginal return when they move out than before. And it is truer in the Eurozone which have no frontier tax, where the technological and educational level is mostly the same in each country and where every country has the same currency that is Euro. However in those countries, there are some which have a much lower labor cost and lesser social protection, hence lesser social cost.Even so, we can still see in the Eurozone some rich countries with good social protection and high labor cost attracting companies as Germany. And this is in this segment that the new French labor market regulation want to lead the country by copying what have been done in the successful countries and applying it in the French social model.This is why the goal of this reform is not only to attract foreign companies but also to keep national companies in France in order to have a higher employment rate, lesser unemployment rate and so to have a higher economic growth.1. IntroductionSo we can be lead to ask ourselves how the new labor market regulations, such as the one written in the initial project, can have an impact on the French economic growth.We will try to answer to this problematic in t

 

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Bachelor Thesis


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English.


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Economics, Government and Governance, Public Finances and Taxation, Labor Law.


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France.


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