OECD Economics Department Working Papers

ISSN :
1815-1973 (online)
DOI :
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 Short-Term Effects of Structural Reforms

An Empirical Analysis You or your institution have access to this content

Authors:
Romain Bouis1, Orsetta Causa, Lilas Demmou1, Romain Duval, Aleksandra Zdzienicka2
Author Affiliations
  • 1: OECD, France

  • 2: University of Lyon, France

Publication Date
26 Mar 2012
Bibliographic information
No.:
949
Pages
63
DOI
10.1787/5k9csvk4d56d-en

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Drawing on new empirical analysis of 30 years of structural reforms across the OECD, this paper sheds light on the impact of reforms over time, identifies the horizon over which their full effects materialise, and investigates whether such effects vary with prevailing economic conditions and institutions. Impulse responses of aggregate outcomes (GDP growth, employment rate) to various labour, product market and tax reforms are estimated at different horizons. This analysis indicates that the benefits from reforms typically take time to fully materialise. When significant effects are found in the short run, reforms seldom involve significant aggregate economic losses; on the contrary they often deliver some benefits. The absence of major depressing effects does not lend support to the view that reforms should be in general accompanied by substantial macroeconomic policy easing in order to deliver some short-term gains. Nevertheless, there is also tentative evidence that some labour market reforms (e.g. of unemployment benefit systems and job protection) pay off more quickly in good times than in bad times, and can even entail short-term losses in severely depressed economies.
JEL Classification:
  • E02: Macroeconomics and Monetary Economics / General / Institutions and the Macroeconomy
  • E21: Macroeconomics and Monetary Economics / Macroeconomics: Consumption, Saving, Production, Employment, and Investment / Consumption; Saving; Wealth
  • E22: Macroeconomics and Monetary Economics / Macroeconomics: Consumption, Saving, Production, Employment, and Investment / Capital; Investment; Capacity
  • E24: Macroeconomics and Monetary Economics / Macroeconomics: Consumption, Saving, Production, Employment, and Investment / Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
  • E60: Macroeconomics and Monetary Economics / Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook / General
  • J21: Labor and Demographic Economics / Demand and Supply of Labor / Labor Force and Employment, Size, and Structure
  • J23: Labor and Demographic Economics / Demand and Supply of Labor / Labor Demand
  • J38: Labor and Demographic Economics / Wages, Compensation, and Labor Costs / Public Policy
  • J58: Labor and Demographic Economics / Labor–Management Relations, Trade Unions, and Collective Bargaining / Public Policy
  • J68: Labor and Demographic Economics / Mobility, Unemployment, and Vacancies / Public Policy