OECD Economics Department Working Papers

ISSN: 
1815-1973 (online)
http://dx.doi.org/10.1787/18151973
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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

 

The Political Economy of Structural Reform

Empirical Evidence from OECD Countries You or your institution have access to this content

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Author(s):
Jens Høj, Vincenzo Galasso, Giuseppe Nicoletti, Thai-Thanh Dang
19 July 2006
Bibliographic information
No.:
501
Pages:
77
http://dx.doi.org/10.1787/881353527404

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In an empirical investigation, the paper identifies the main political economy drivers of structural policy changes in OECD countries' labour and product markets over the 1985-2003 and 1973-2003 periods respectively. Some of the drivers are beyond the control of governments (i.e., that are exogenous to the political process) while there are others over which governments may have some leverage. The core empirical results, based on a set of policy indicators that cover 21 countries, suggest that the former set of factors has an important influence on the implementation of structural reform, including economic crises, exposure to foreign competition, and government?s duration in office. Nonetheless, the latter set of factors, including budgetary conditions and spillovers across policy areas -- in particular from the product to the labour market -- is also important to both initiate and sustain reforms.
Keywords:
labour markets, political economy of reforms, product markets
JEL Classification:
  • C23: Mathematical and Quantitative Methods / Single Equation Models ; Single Variables / Panel Data Models ; Spatio-temporal Models
  • D72: Microeconomics / Analysis of Collective Decision-Making / Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
  • P11: Economic Systems / Capitalist Systems / Planning, Coordination, and Reform
  • P16: Economic Systems / Capitalist Systems / Political Economy
 
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