Does Regulation Kill Jobs?

Preface

Preface Are regulations job killers or job creators? This question has dominated much public debate in the United States during the past several years as the nation has suffered sustained high levels of unemployment. Some politicians espouse the view that regulations are job killers, while others claim that regulations either have little negative effect or actually stimulate the creation of new industries and jobs. Although the debate over jobs and regulation often divides along party lines, politicians on both sides of the aisle share a common desire to improve economic conditions and lessen the hardship that unemployment imposes on individuals and their families. This book responds to that common desire by bringing together the work of leading scholars and practitioners to understand better how regulation affects employment and what regulatory agencies might do to improve their analysis of these employment impacts. Despite the obvious reasons for wanting to understand better whether regulation helps or hurts employment, neither regulatory analysts nor academic researchers have yet to develop the kind of evidentiary foundation needed to provide solid answers. Partly this is because the empirical relationship between regulation and employment is harder to untangle than it might seem at first glance. Intuitively it might seem obvious that regulation adversely affects employment. When regulation increases the cost of doing business, it drives up the cost of products and services, reducing demand and thereby shrinking employers’ need for workers and the capacity to retain them. But just as intuitively, it might seem obvious that regulation can promote jobs. After all, one of the ways regulation increases the cost of doing business is by increasing the demand for goods and services needed to comply with the law, thus creating additional demand for labor associated with installing and operating required equipment and implementing mandated protocols. Of course, it is also highly plausible that both intuitions have validity and that the same regulations that increase jobs for some individuals decrease them for others. viii Preface Some empirical research has tested these various intuitions with respect to a limited number of regulatory domains by using several methods and sources of data. As the opening chapters in this book explain in detail, the results of past research have been informative even if still in ways somewhat limited. Given the economy’s complexity and dynamism, combined with regulation’s heterogeneity and expansiveness, more work is needed to produce firm, generalizable answers. This book seeks to help in filling this need. It adds to existing knowledge of regulation’s employment effects as well as aims to stimulate additional research and analysis by academic researchers as well as government analysts. Its chapters offer new empirical findings about the connection between regulation and jobs, substantial ideas about how economic analysis of regulations can better incorporate consideration of employment effects, and proposals for reforming the regulatory process to give employment its proper due in regulatory decision making. Of course, this book does not purport to settle definitively the debate between those who view regulation as job killing and those who view regulation as job creating. It does, however, aim toward narrowing the divide through the achievement of a better understanding of the true consequences of regulation on the level and quality of employment. In times of substantial economic stress, the public and its elected officials naturally expect that government agencies will give greater scrutiny to employment effects as they consider adopting new regulations or modifying existing ones. This book—the first of its kind to examine the relationship between regulation and jobs—offers guidance for ensuring that such heightened scrutiny can meaningfully contribute to improved regulatory analysis, design, and outcomes. Cary Coglianese ...