Labor Market Rigidity and the Success of Economic Reforms Across More Than 100 Countries PDF Download

Author: Alvaro Forteza
Publisher:
ISBN:
Category :
Languages : en
Pages : 35

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Author: Alvaro Forteza
Publisher:
ISBN:
Category :
Languages : en
Pages : 50

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Book Description
Labor market policies and institutions affect the success of economic reform but probably more for political than for economic reasons. Growth appears not to be hurt by minimum wages and mandatory benefits. But the relative size of organized labor (in government and elsewhere) is crucial. Forteza and Rama show that labor market policies and institutions affect the effectiveness of economic reform programs. They compare annual growth rates across 119 countries, using data from 449 World Bank adjustment credits and loans between 1980 and 1996.The results indicate that countries with relatively rigid labor markets experienced deeper recessions before adjustment and slower recoveries afterward.The authors also disentangle the mechanisms through which labor market rigidity operates.They find that minimum wages and mandatory benefits do not hurt growth. But the relative size of organized labor (in government and elsewhere)appears to matter.Labor market rigidity seems to be relevant more for political reasons than for economic reasons. The authors' findings suggest that not enough attention has been paid to vocal groups (urban, middle-class groups) that stand to lose from economic reform. The implications of the findings for policymakers: There should be less focus on deregulating the labor market and more on defusing the opposition of (vocal) losers.The results are robust to changes in measurement, controls, and sample and do not suffer from self-selection bias.This paper - a product of Poverty and Human Resources, Development Research Group - is part of a larger effort in the group to understand the impact of labor market policies and institutions on economic performance. The study was funded by the Bank's Research Support Budget under the research project quot;The Impact of Labor Market Policies and Institutions on Economic Performancequot; (RPO 680-96).

Author: Mr.David T. Coe
Publisher: International Monetary Fund
ISBN: 1451951256
Category : Business & Economics
Languages : en
Pages : 40

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This paper argues that an important group of labor market policies are complementary in the sense that the effect of each policy is greater when implemented in conjunction with the other policies than in isolation. This may explain why the diverse, piecemeal labor market reforms in many European countries in recent years have had so little success in reducing unemployment. What is required instead is deeper labor market reforms across a broader range of complementary policies and institutions. To be politically feasible, these reforms must be combined with measures to address distributional issues.

Author: Pierre-Richard Agénor
Publisher: International Monetary Fund
ISBN: 1451854781
Category : Business & Economics
Languages : en
Pages : 98

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This paper examines the role of the labor market in the transmission process of adjustment policies in developing countries. It begins by reviewing the recent evidence regarding the functioning of these markets. It then studies the implications of wage inertia, nominal contracts, labor market segmentation, and impediments to labor mobility for stabilization policies. The effect of labor market reforms on economic flexibility and the channels through which labor market imperfections alter the effects of structural adjustment measures are discussed next. The last part of the paper identifies a variety of issues that may require further investigation, such as the link between changes in relative wages and the distributional effects of adjustment policies.

Author: Alvaro Forteza
Publisher:
ISBN:
Category : Economic development
Languages : en
Pages : 56

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Labor market policies and institutions affect the success of economic reform but probably more for political than for economic reasons. Growth appears not to be hurt by minimum wages and mandatory benefits. But the relative size of organized labor (in government and elsewhere) is crucial.

Author: Mr.Anthony Annett
Publisher: International Monetary Fund
ISBN: 145197535X
Category : Business & Economics
Languages : en
Pages : 25

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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.

Author: Mr.Hamid R Davoodi
Publisher: International Monetary Fund
ISBN: 9781589062290
Category : Business & Economics
Languages : en
Pages : 44

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The Middle East and North Africa (MENA) is an economically diverse region. Despite undertaking economic reforms in many countries, and having considerable success in avoiding crises and achieving macroeconomic stability, the region’s economic performance in the past 30 years has been below potential. This paper takes stock of the region’s relatively weak performance, explores the reasons for this out come, and proposes an agenda for urgent reforms.

Author: Claire H. Hollweg
Publisher: World Bank Publications
ISBN: 1464802637
Category : Business & Economics
Languages : en
Pages : 123

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This report quantifies labor mobility costs in developing countries and simulates the implied adjustment paths of employment and wages following a change in trade policy. High mobility costs are shown to reduce the potential gains to trade reform.

Author: Gabriel Frossard Barbosa
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 74

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This paper explores the impact of changes in the rigidity of labor market legislation on income inequality. Although traditional scholarship has focused on the impact of institutional arrangements on a selection of economic outcomes such as unemployment and labor force participation, comparably little attention has been paid to the effects arising from the rigidity of existing labor market institutions and its implications for income inequality. To date little is known about how and through which channels changes and overall rigidity of labor markets impact income inequality. In order to investigate this relationship, I compile a unique dataset based on the Labor Market Rigidity Index (LAMRIG) constructed by Campos and Nugent (2012), which covers over 140 countries between 1950 and 2004, as well as a composite measure of Gini coefficients for the same period. I further refine my analysis to examine wage dispersions through which labor market legislation affects, contracting or widening, incomes in different countries as well as the impact of the substitution of labor for capital. My results confirm previous findings on the negative association between labor market rigidity, wage dispersion, the financialization of the economy, and income inequality. Moreover, I find that positive changes in labor market legislation, i.e. greater labor market protections and centralization are associated with negative changes in intra-country differences between top and low-wage earners. These estimation results are robust to different model specifications and assumptions. From a policy perspective, my findings imply that labor market reforms might produce undesirable side effects in aggravating wage dispersion and income inequality.

Author: Marc Bacchetta
Publisher: World Trade Organization
ISBN: 9789287036919
Category : Business & Economics
Languages : en
Pages : 0

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Book Description
World trade has expanded significantly in recent years, making a major contribution to global growth. Economic growth has not led to a corresponding improvement in working conditions and living standards for many workers. In developing countries, job creation has largely taken place in the informal economy, where around 60 per cent of workers are employed. Most of the workers in the informal economy have almost no job security, low incomes and no social protection, with limited opportunities to benefit from globalization. This study focuses on the relationship between trade And The growth of the informal economy in developing countries. Based on existing academic literature, complemented with new empirical research by the ILO And The WTO, The study discusses how trade reform affects different aspects of the informal economy. it also examines how high rates of informal employment diminish the scope for developing countries to translate trade openness into sustainable long-term growth. The report analyses how well-designed trade and decent-work friendly policies can complement each other so as to promote sustainable development and growing prosperity in developing countries.