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OECD Employment Outlook 2016

image of OECD Employment Outlook 2016

This 2016 edition of the OECD Employment Outlook provides an in-depth review of recent labour market trends and short-term prospects in OECD countries. Chapter 1 examines recent labour market developments, with a special focus on vulnerable youth who are neither working nor in education or training. The size of this group has grown in recent years in many OECD countries and governments will need to take vigorous policy measures if they are to meet the target, recently adopted by G20 governments, of reducing the share of youth who are vulnerable by 15% by 2025. Chapter 2 considers skills use at work: are countries doing enough to assure that workers are able to make full use of their skills on the job? Chapter 3 looks at the short-term effects of structural reforms on employment and identifies successful strategies for reducing transition costs. Chapter 4 looks at how to close the labour market gender gap in emerging economies, proposing a comprehensive policy response to the problem. The Outlook’s analysis and recommendations are complemented by a statistical annex.

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Short-term labour market effects of structural reforms

Pain before the gain?

There is broad consensus that well-designed structural reforms of product and labour markets can have positive effects in the long run. And yet, structural reforms often involve significant reallocation of resources which might entail costly adjustments, especially in the labour market. This chapter exploits long time series of industry-level data in a group of OECD countries to analyse the short-term labour market effects of reforms lowering barriers to entry and the cost of dismissal. It finds that both policies induce non-negligible transitory employment losses on average, a result that is confirmed by complementary evidence from case studies of three recently implemented EPL reforms. The strength of these effects varies depending on the underlying industry and labour market structure, and on cyclical conditions. The chapter also discusses policy options that could help attenuate these costs, and whose applicability and aptness may vary across countries.

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