Mercatus scholar Keith Hall will explain what agencies miss in their employment impact analysis for regulation, and what implications that raises for policymakers concerned about the economic impact of regulation over the long-term.

1. The Employment Costs of Regulation
Keith Hall
Senior Research Fellow
Mercatus Center
George Mason University
June 14, 2013

2. Introduction
• Employment Impact Ignored by U.S. Agencies
• Lack of Transparency to Public & Congress
• Recommendations:
1. Drop
Full
Employment
Assump3on
2. Measure
Cost
of
Unemployment
3. Use
Mul3market
Models
4. Cumula3ve
Effects

3. Role of Regulation in Market Economy

4. Balancing Benefits and Costs

5. Employment Impact of Regulation

6. Three Types of Employment Impact
• Macroeconomic/Dynamic Effects
• Long Run Impact on Productivity
• Worker Displacement Cost

7. Drop Full Employment Assumption
-10
-8
-6
-4
-2
0
2
0 1 2 3 4 5
Years Since Start of Recession
Job Loss Since the End of 2007
(millions)
Source: Current Employment Survey, U.S. Bureau of Labor Statistics
Produced by Keith Hall, Mercatus Center at George Mason University

8. Measure Cost of Unemployment
$45,000
$27,000
$35,000
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
Before
Job
Loss
One
Year
Later
20
Years
Later
Average Annual Earnings
Before/After Job Displacement
Source: “Recessions and the Costs of Job Loss”,
Davis and Wachter (2011)

9. Use Multimarket Analysis

10. Estimate Cumulative Effects