Structural Reforms and Labor Market Outcomes : International Panel Data Evidence
This paper explores the impact of structural reforms on a comprehensive set of macro-level labor-market outcomes, including the unemployment rate, the average wage index, and overall and female employment levels and labor force participation rates. Together these outcome variables capture the overall health of the labor market and the aggregate welfare of workers. Yet, there seems to be no other comprehensive empirical investigation in the existing literature of the impact of structural reforms at the cross-country macro level on labor-market outcomes other than the unemployment rate. Data were collected from a variety of sources, including the World Bank World Development Indicators, the International Monetary Fund International Financial Statistics, and the International Labor Organization Key Indicators of the Labor Market. The resulting dataset covers up to 88 countries, the majority being developing, for 10 years on either side of structural reforms that took place between 1960 and 2001. After documenting the average trends across countries in the labor-market outcomes up to 10 years on either side of each country s structural reform year, the authors run fixed-effects ordinary least squares as well as instrumental variables regressions to account for the likely endogeneity of structural reforms to labor-market outcomes. Overall the results suggest that structural reforms lead to positive outcomes for labor. Unlike related literature, the paper does not find conclusive evidence on unemployment. Redistributive effects in favor of workers, along the lines of the Stolper-Samuelson effect, may be at work.
Summary: | This paper explores the impact of
structural reforms on a comprehensive set of macro-level
labor-market outcomes, including the unemployment rate, the
average wage index, and overall and female employment levels
and labor force participation rates. Together these outcome
variables capture the overall health of the labor market and
the aggregate welfare of workers. Yet, there seems to be no
other comprehensive empirical investigation in the existing
literature of the impact of structural reforms at the
cross-country macro level on labor-market outcomes other
than the unemployment rate. Data were collected from a
variety of sources, including the World Bank World
Development Indicators, the International Monetary Fund
International Financial Statistics, and the International
Labor Organization Key Indicators of the Labor Market. The
resulting dataset covers up to 88 countries, the majority
being developing, for 10 years on either side of structural
reforms that took place between 1960 and 2001. After
documenting the average trends across countries in the
labor-market outcomes up to 10 years on either side of each
country s structural reform year, the authors run
fixed-effects ordinary least squares as well as instrumental
variables regressions to account for the likely endogeneity
of structural reforms to labor-market outcomes. Overall the
results suggest that structural reforms lead to positive
outcomes for labor. Unlike related literature, the paper
does not find conclusive evidence on unemployment.
Redistributive effects in favor of workers, along the lines
of the Stolper-Samuelson effect, may be at work. |
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