Employment policies and data

OECD Employment Outlook 2006 - Chapter 7. Reassessing the Role of Policies and Institutions for Labour Market Performance: A Quantitative Analysis


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

Chapter 7. Reassessing the Role of Policies and Institutions for Labour Market Performance: A Quantitative Analysis 

Did countries that undertook structural reforms fare better than the others in terms of employment and unemployment? How much of the evolution of employment and unemployment in the recent years can be explained by institutional and policy changes? Changes in policies and institutions appear to explain almost two-thirds of non-cyclical unemployment changes over the past two decades. Reforms in the tax-benefit systems and liberalisation of product market regulations unambiguously improve labour market performance. Reforms in these areas appear to be mutually reinforcing, so that the benefit from any particular policy reform tends to be greater the more employment-friendly the overall policy and institutional framework. Likewise, spending on active labour market programmes can reduce work disincentive effects brought about by generous unemployment benefits. Macroeconomic conditions also matter for unemployment performance, but their impact is shaped by labour market policies and institutions.

For further reading, see the background report of this chapter (1550Kb, pdf, English) and the Key Reports on line.


Introduction and main findings
1. The determinants of structural unemployment

1.1. Policies, institutions and unemployment: baseline results
1.2. Additional determinants of unemployment patterns: minimum wages, active labour market programmes, and housing policy
1.3. Interactions between institutions and shocks
2. Group-specific employment rates
2.1. Prime-age men and women
2.2. Older workers
2.3. Younger workers
2.4. Summing up policy influences on employment rates
Annex 7.A1. Baseline Regression Models


List of tables

7.1. Institutions and policies change the cumulated unemployment cost of adverse macroeconomic shocks
7.A1.1. Baseline unemployment rate equations, 1982-2003
7.A1.2. Baseline employment rate equations, 1982-2003


List of figures

7.1. Correlations between the unemployment rate and selected institutions and policies
7.2. Unemployment benefits, tax wedges, product market competition and the structure of collective bargaining significantly affect unemployment
7.3. The evolution of unemployment is well explained by policy reforms
7.4. Active labour market programmes can significantly modify the impact of unemployment benefits on the unemployment rate
7.5. The unemployment effects of macroeconomic shocks are shaped by existing policies and institutions
7.6. The impact of policies and institutions on employment rates vary across demographic groups
7.7. Unemployment benefits, tax wedges and several group-specific policies have an unambiguous effect on the aggregate employment rate


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