Lessons from Successful Labor Market Reformers in Europe

Anthony Annett

No 2007/001, IMF Policy Discussion Papers from International Monetary Fund

Abstract: Welfare states can be reformed successfully, and popular support for reforms can be maintained. But this requires an internally consistent package of labor market, fiscal, and product market reforms, including some kind of buy-in, through, for example, tax cuts. Empirical analysis combined with a select number of case studies-comprising Ireland, Denmark, the Netherlands, and the United Kingdom-reveals that successful reformers focused on increasing labor supply through benefit reform, lowering tax wedges, and lowering government consumption. At the same time, greater labor supply translated into employment growth more effectively in the presence of liberal labor and product markets.

Keywords: PDP; labor market; country; wage; product market; labor market regulation; Labor supply; wage moderation; fiscal adjustment; political economy; event study; product market rigidity; employment growth; product market regulation indices; Labor taxes; Wages; Employment; Labor markets; Europe (search for similar items in EconPapers)
Pages: 25
Date: 2007-05-01
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Citations: View citations in EconPapers (14)

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