Employment policies and data

OECD Employment Outlook 2006 - Chapter 6. Understanding Policy Interactions and Complementarities, and their Implication for Reform Strategies


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    ISBN: 9264023844
    Publication: 13/06/2006
    280 pages

Chapter 6. Understanding Policy Interactions and Complementarities, and their Implication for Reform Strategies 

Can different combinations of policies and institutions deliver similarly high employment rates? Since there are important interactions between macroeconomic, labour and product market policies, countries can take advantage of synergies and compensating mechanisms in assembling policy packages and building political support for reform. Nonetheless, only a few packages have been identified which can achieve high employment while also assuring fiscal sustainability and resilience in the face of adverse economic shocks. These successful policy packages combine stability-oriented macroeconomic policy and competitive products markets with a good overall incentive structure in the labour market. Two broad reform strategies for structuring labour market incentives can be identified in the OECD countries which have achieved high employment rates. These strategies differ in their implications for the level of public spending (and taxes) and the degree of risk and inequality characterising labour market – factors that lay a key role vis-à-vis the political acceptability of structural reforms.

For further reading, see the Key Reports on line .


1. Labour market policies and institutions and the macroeconomic environment
1.1. The interaction between macroeconomic shocks and labour market policies and institutions
1.2. Labour market reforms improve the macroeconomic and public finance performance
2. Policy interactions and packages
2.1. Existing policy packages and employment performance
2.2. Policy interactions
3. Political economy of reforms
3.1. Distributional and timing effects
3.2. The role of policy design in overcoming adverse distributional and timing effects
Annex 6.A1. Principal Component Analysis of Policy Packages and Employment Performance


List of tables

6.1. Interactions between policies/institutions and macroeconomic shocks
6.2. Medium-term impact of a 1 percentage-point reduction in structural unemployment on potential growth and budget balance
6.3. Four different regimes of labour market functioning
6.4. Simulated effect of reform complementarities
6.A1.1. Explained variance


List of figures

6.1. Unemployment, growth and public finances
6.A1.1. A synthetic picture of heterogeneity in the policy settings and performance of labour markets countries, early 2000s


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