The Political Economy of Reform

Lessons from Pensions, Product Markets and Labour Markets in Ten OECD Countries

image of The Political Economy of Reform

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.

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The 1994 pension reform proposals

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 The reform was withdrawn and the government fell.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.

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