The Political Economy of Reform

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

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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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United States

The 1996 welfare reform

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.

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