The Brussels Journal looks at regulation and finds Anti-Market Mentality Is Costly

Two recent studies, undertaken by economists at the International Monetary Fund, have examined the impact of (1) laws that limit work time in France, and (2) of government fuel subsidies in several developing countries.

First the French study:

In their econometric study, the IMF economists studied the law’s effect by comparing the behavior of workers in large and small firms before and after the new rules went into effect. This is similar to medical experiments were the treatment (35-hour workweek) is administered to one group (large firms) and not to another (small firms). They found that the law had a number of unfortunate and unintended consequences, and their conclusion (See IMF SURVEY of January 29, 2007, p.32) was quite negative.

“In sum, the 35-hour workweek appears to have had a mainly negative impact. It failed to create more jobs and generated a significant – and mostly negative – reaction both from companies and workers as they tried to neutralize the law’s effect on hours of work and monthly wages. While it cannot be ruled out that individuals who did not change their behavior because of the law became more satisfied with their work hours, simple survey measures do not show increased satisfaction”.

Now the Second second study:

At the level of government, fuel subsidies can contribute to unsustainable fiscal deficits and direct public expenditure away from more productive uses. At the household level, below-market fuel prices encourage inefficiency in energy use. They are also not cost-effective as a means to subsidize the poor, because they will inevitably involve a substantial leakage of benefits to higher-income people.

Should I be surprised?