| Abstract: |
This thesis investigates the effect that market institutions have on economic
outcomes such as employment and innovation. The market institutions under
study are those that determine the conditions in product, labour and capital
markets. Of particular interest is how the effect of institutional changes in
one market depends on the conditions in another, or depends on the nature of
innovation by the firm. The first chapter describes the matching of patents at
the European Patent Office to firm accounts data for all registered firms
across fifteen European countries. This constitutes a valuable new dataset for
research in innovation that is used for much of the empirical work in this
thesis. The second chapter investigates the impact of product market
competition on unemployment, and how this depends on labour market
institutions. It uses differential changes in regulations across OECD
countries to find that increased competition reduces unemployment, more so in
countries with strong unions. The third chapter investigates how the effect of
product market competition on innovation depends on financial institutions.
Using exogenous variation in competition in manufacturing industries this
chapter finds that the positive effect of competition on innovation is larger
in countries with good financial institutions. The fourth chapter investigates
the effect of employment protection legislation on innovation. The theoretical
effect of employment protection legislation on innovation is ambiguous, and
empirical evidence is thus far inconclusive. This chapter finds that within
multinational enterprises overall innovation occurs more in subsidiaries
located in countries with high employment protection, however radical
innovation occurs more in subsidiaries located in countries with low
employment protection. |