The Political Economy of Reform

The Political Economy of Reform

Lessons from Pensions, Product Markets and Labour Markets in Ten OECD Countries You do not have access to this content

Click to Access: 
    http://oecd.metastore.ingenta.com/content/1109011e.pdf
  • PDF
  • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform_9789264073111-en
  • READ
Author(s):
William Tompson
Publication Date :
24 Aug 2009
Pages :
498
ISBN :
9789264073111 (PDF) ; 9789264073067 (print)
DOI :
10.1787/9789264073111-en

Hide / Show Abstract

This report examines why some policy reforms get implemented and others languish by examining 20 structural reform efforts in 10 OECD countries over the past two decades. The case studies cover a wide variety of reform attempts in three key areas: pensions, labour- and product-market regulation. Key factors in the political, economic and reform-specific arenas are identified as helping or hindering reform, and these findings are cross-checked using a relatively simple set of Spearman rank correlations. The report’s two-pronged analytical approach – quantitative and qualitative – results in unique insights for policy makers designing, adopting and implementing structural policy reforms.
Also available in: French

Expand / Collapse Hide / Show all Abstracts  

  • Mark Click to Access
  • Click to Access: 
      http://oecd.metastore.ingenta.com/content/1109011ec001.pdf
    • PDF
    • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/executive-summary_9789264073111-1-en
    • READ
    Executive Summary
  • Add to Marked List
  • Expand / Collapse Hide / Show all Abstracts Structural policy reform: Learning from the past

    • Mark Click to Access
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec002.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/introduction_9789264073111-2-en
      • READ
      Introduction
      The primary aim of this study is to identify political economy lessons that may be of use to policy makers seeking to design, adopt and implement structural reforms. It seeks to build on previous work by the OECD Economics Department and also to contribute to the broader OECD project on "Making Reforms Happen". This study takes an open approach, aimed at drawing general conclusions from the analysis of specific cases.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec003.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/key-determinants-of-successful-structural-reform_9789264073111-3-en
      • READ
      Key determinants of successful structural reform
      This chapter presents the main lessons that emerge from 20 studies of structural reform episodes in member countries completed during 2007-08. This exercise points to a number of striking regularities in the way reform processes unfold, and it considers the role of political and economic factors exogenous to the reform processes under study. It turns to issues related to scope and timing of reform, particularly speed and sequencing. It also deals with questions of consultation and public communication and the way reformers deal with actual or potential opponents of reform.
    • Add to Marked List
  • Expand / Collapse Hide / Show all Abstracts Case studies in pension-system reform

    • Mark Click to Access
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec004.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/france_9789264073111-4-en
      • READ
      France
      In mid-2003, France adopted a major pension reform intended to reduce the inequalities that existed between private- and public-sector pension systems, to assure the financial sustainability of both, and to reduce the existing large incentives for early retirement. Although the reform aroused intense opposition, the government was able to secure its adoption with relatively few modifications; its success owes much to the lessons drawn from earlier reform attempts.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec005.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/italy_9789264073111-5-en
      • READ
      Italy
      In the autumn of 1994, the centre-right government of Italy presented a package of pension reform proposals as a part of its budget package for the following year. The primary aim of the package was to help the government meet its deficit-reduction target for 1995 via structural changes that would add credibility to Italy’s medium-term fiscal strategy. The reform was withdrawn and the government fell. The defeat of the 1994 pension reform plan was a result of a number of factors: coalition fragility, unilateral approach, uneven distribution of costs and inadequate discussion and communication.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec006.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/mexico_9789264073111-6-en
      • READ
      Mexico
      A reform of the pensions system for federal employees administered by the federal Institute for Social Security and Social Services for State Workers (ISSSTE) was adopted in March 2007. Under the reformed system, pension contributions are channelled to individual accounts, allowing portability of pensions between the ISSSTE scheme and the general scheme. The reform was adopted with the backing of Mexico’s main public-sector unions, who had initially been strongly opposed to reform.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec007.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/poland_9789264073111-7-en
      • READ
      Poland
      Poland introduced a comprehensive reform of its general old-age pension system in 1999 in order to put the system on an actuarially sound footing and ensure that pension liabilities were fully financed. The 1999 pension reform stands out for having been designed and adopted under two successive governments of different political orientations – perhaps the most important reform since 1989 to transcend the partisan divide thus.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec008.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/poland_9789264073111-8-en
      • READ
      Poland
      Poland operates a separate social security system for farmers. It covers pensions, healthcare, disability and other benefits for the part of the population that meets the broad criteria for inclusion in the system, which has been criticised for creating perceived inequities and not being self-financing. In the end, only minor changes were adopted. The frustration of the attempt to introduce more fundamental changes to the system reflected a number of factors, including: an unfavourable political context, declining pressure for immediate action, the strength of vested interests and mixed motives for reform.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec009.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/united-states_9789264073111-9-en
      • READ
      United States
      In February 2005, the Bush administration presented a Social Security (pension) reform proposal that would have allowed workers to divert a portion of their payroll taxes to personal savings accounts. The proposal met fierce opposition. Congressional Democrats were united in opposition, and many Republicans were uncomfortable with aspects of the proposal. By mid-2005, it was clear that there would be no significant Social Security reform before the 2006 mid-term elections.
    • Add to Marked List
  • Expand / Collapse Hide / Show all Abstracts Case studies in labour-market reform

    • Mark Click to Access
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec010.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/france_9789264073111-10-en
      • READ
      France
      In an effort to reduce France’s high rates of youth unemployment, the government of Edouard Balladur attempted in 1993-94 to introduce a new form of employment contract with a lower minimum wage for the young. It would have allowed employers to pay younger workers as little as 80% of France’s statutory minimum wage. This triggered several weeks of sometimes violent protests that compelled the government to scrap the measure a month after issuing the decrees.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec011.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/germany_9789264073111-11-en
      • READ
      Germany
      The adoption and implementation of the four laws known as the Hartz reforms in 2002-05 marked the biggest change in German labour-market policy in a generation. The reforms’ focus was on the supply side, and their adoption followed a long period in which labour-market reform had largely been stalled. Though adopted and implemented smoothly, the reform laws subsequently generated a backlash.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec012.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/italy_9789264073111-12-en
      • READ
      Italy
      Labour-market reform in Italy has been an incremental process over more than a decade, but the two principal landmarks have been the Treu and Biagi reforms of 1997 and 2003. The September 1996 True package aimed to increase employment with special provisions for the economically depressed south. The 2003 Biagi law was the most controversial labour-market reform adopted under the centre-right government of Silvio Berlusconi. It aimed to take some of the Treu reforms further, in order to increase employment among youth, women, older workers and job-seekers. These reforms sought to create greater opportunities for new entrants and labour-market outsiders. Both these reforms were driven by EU-related policy considerations. While all social partners agreed to the Treu reform, the adoption of the Biagi law followed a long confrontation between the government and the unions.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec013.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/mexico_9789264073111-13-en
      • READ
      Mexico
      In July 2001, the administration of President Vicente Fox invited organized labour and private sector employers to begin tripartite negotiations on the reform of Mexico’s Federal Labour Law. This process resulted in the introduction of two initiatives in Congress in late 2002. Neither the proposals of the administration nor those of the opposition were approved. Negotiations in Congress in 2003 resulted in a compromise proposal, but it failed to win adoption.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec014.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/the-netherlands_9789264073111-14-en
      • READ
      The Netherlands
      The Netherlands’ disability insurance system has long been recognized as among the most generous in the world. A major reform of the system was agreed by the government and the social partners in the early 2000s and took effect on 1 January 2006. Among the factors that made disability insurance reform possible were: creation of a consensus on the need for reform, lessons learned from previous reform attempts, early reform measures that changed interest-groups’ incentives and government leadership.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec015.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/spain_9789264073111-15-en
      • READ
      Spain
      In an effort to address longstanding rigidities in the labour market, Spain substantially liberalized temporary employment contracts in the middle of the 1980s without relaxing employment protection legislation for permanent workers. This led to an increase in the use of temporary contracts, which soon came to be recognized as a serious problem in its own right. In order to reduce this labour-market dualism, Spain adopted reforms 1994 and 1997 that sought to diminish incentives to use temporary contracts and to make indefinite contracts less expensive. Both reforms were accompanied by changes to the system of collective bargaining.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec016.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/sweden_9789264073111-16-en
      • READ
      Sweden
      Throughout the 1990s and early 200s, Swedish governments tried to address the problem of rapidly rising expenditures on sickness insurance, as well as the accompanying growth in the number of days lost as a result of sickness. Successive governments introduced numerous adjustments, but they made little sustained progress in tackling the problem until 2003. This case study examines the reforms of the 1990s and the reasons why the proved so difficult to implement and sustain despite broad agreement on the need for reform.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec017.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/united-states_9789264073111-17-en
      • READ
      United States
      The 1996 Personal Responsibility and Work Opportunity Reconciliation Act brought about an overhaul of America’s major social assistance programmes, in an effort to reduce work disincentives for benefit recipients and to improve access to training, childcare and health insurance for those making the transition to work. Welfare reform was a difficult issue to tackle, especially in an election year, and the legislation passed only when the Republican Congress and the Democratic President reached agreement in the wake of two presidential vetoes.
    • Add to Marked List
  • Expand / Collapse Hide / Show all Abstracts Case studies in product-market reform

    • Mark Click to Access
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec018.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/australia_9789264073111-18-en
      • READ
      Australia
      Australia was among the first countries to undertake substantial market reform in the electricity sector. An open access regime governs use of the transmission and distribution networks. Retail market opening gives all electricity customers the right to choose their retail suppliers, but customers can still opt not to enter a contestable market and to remain under regulated electricity tariffs. Most assessments credit the reform with increasing efficiency and reducing electricity prices.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec019.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/australia_9789264073111-19-en
      • READ
      Australia
      Australia undertook a major reform of water resource policies with the 1994 Water Reform Framework, which aimed to establish a market-based system by 2005. This ambitious agenda put Australia at the leading edge of water management internationally. However, progress in implementing water reform over the ensuing decade was slow and uneven and fell far short of the goals of the original reform programme. As a result, a new water reform initiative was launched in 2004 in an effort to reinvigorate the reform process.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec020.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/germany_9789264073111-20-en
      • READ
      Germany
      In late 1999, a combination of pressure from some of the federal states and the publication of a pair of conflicting studies commissioned by two federal ministries triggered renewed discussion of the need to liberalise Germany’s restrictive law on opening hours for retail shops. The ensuing three-and-a-half years of debate resulted only in a modest further liberalisation. In the end, liberalisation came about as a result of a judicial action rather than the normal policy process.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec021.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/the-netherlands_9789264073111-21-en
      • READ
      The Netherlands
      Around 95% of Dutch rents are regulated, accounting for almost 44% of the housing market. In 2004, the government proposed reducing the share of regulated rents in stages. Although the rent bill eventually passed the lower house of the States-General, it was still before the upper chamber at the time of the November 2006 general election. The coalition agreement that defined the new government programme after the election stipulated that it be withdrawn and that rent increases be limited. Three years’ debate over partial liberalisation thus ended with a shift towards tighter regulation.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec022.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/spain_9789264073111-22-en
      • READ
      Spain
      The regulation of retail hours and entry has been a controversial issue since the mid 1990s, when the government partially reversed an earlier retail-sector deregulation, allowing regional authorities to regulate both opening hours and Sunday/ holiday opening, and to grant or withhold permission to open new hypermarkets. Numerous barriers to entry and competition remain in the retail sector. Studies suggest that the cumulative impact of these barriers is significant. The politics of the issue involve both tensions between central and local governments and conflicts between producer and consumer interests.
    • Click to Access: 
        http://oecd.metastore.ingenta.com/content/1109011ec023.pdf
      • PDF
      • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/the-political-economy-of-reform/sweden_9789264073111-23-en
      • READ
      Sweden
      In January 1993, parliament abolished the state-owned postal operator’s monopoly on the collection and delivery of letter mail items. Legislation adopted at the beginning of the following year transformed the Postal Administration into a joint-stock company and  created a new legal and regulatory framework for the postal sector. These changes created the world’s first wholly liberalised postal market. Although the authorities moved rapidly to open up the market, the initial liberalisation was followed by several years of regulatory innovation and adjustment. The liberalisation overall, however, was relatively smooth.
    • Add to Marked List