Final answer:
U.S. regulations allow for greater flexibility in hiring and firing practices for companies, which helps to shift workers to more productive firms and sectors. Excessive regulations can discourage hiring, while a market-oriented economy provides firms with the freedom to operate with fewer restraints.
Step-by-step explanation:
U.S. regulations make it easier for companies to hire and fire workers and to start and end business activities compared to many other industrialized nations. This flexibility makes it easier for markets to relocate workers to more productive firms and sectors. On the demand side of the labor market, factors such as government rules, social institutions, and the presence of unions can influence firms' hiring decisions. Excessive governmental regulations can discourage businesses from hiring due to the increased cost and complexity of compliance. On the other hand, a market-oriented economy allows firms the freedom to make their own choices. They have the freedom to hire workers, expand their businesses, merge with other companies, and reduce labor costs by relocating operations to areas with cheaper labor, known as footloose industries.