Key lessons for labour market reforms: evidence from OEGD countries' experiences

Abstract

Summary II Since 1992, the OECD has been intensively researching into the causes and consequences of high, persistent unemployment and effective remedies to tackle it. In particular, since the Jobs Stu& was published in 1994, the OECD has elaborated detailed policy recommendations for each of its member countries and closely monitored their progress (or lack of it) in implementing these recommendations. This process identified six countries that ha1.e succeeded in reducing unemployment significantly in the 1990s, together with a few other countries that have maintained unemployment at relatively low levels. The purpose of this paper is to distil the lessons for labour market reforms from the szicceues and faihres. It begins by discussing the structural urlemploj~ment indicator that the OECD has used to identify the successful countries. This is followed by a review of the cross-country determinants of structural unemplojrment that focuses on the role of labour market policies and certain institutional factors. One novelty is the specific attention paid to potential interactions between labour market policies and institutional features of the collective bargaining system. The paper also highlights several key lessons for labour market reforms drawing on recent OECD research. In particular, it discusses the role played by labour market insiders in the process of reform. It considers the uTay in which concerns about the equity effects of labour market reforms have played a role in shaping policies. Finally, it discusses the role of crises as a potential catalyst for needed reforms. II