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 2005 Social Security reform debate

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.

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