Does Less Regulation Mean More Jobs?

by Stuart Shapiro

Congress has recessed and while Republicans go home to campaign largely on the fact that the Bush (who’s he?) recession has not faded, it’s important to note the GOP plan for recovery. To improve employment, the Republicans have had one solution: cut regulation. Does regulation make a difference on jobs?

…the research is mixed. Studies of environment regulations show that on balance regulation has had little or positive impact on overall industry-level employment. One possible explanation is that spending to comply with environmental regulations is tiny compared with other costs of normal operations. There can also be substantial health and worker productivity benefits associated with regulations.

I’m researching a book chapter on this subject, and I’m surprised by how contradictory the evidence is. One thing is clear: If the government is to play a role in decreasing unemployment, spending will be much more effective than deregulation. But with a Congress unable to even agree to spend on drought relief, it is too much to ask them to put people back to work.

By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.