The Distributional Impact of Labour Market Reforms: A Model-Based Assessment

This chapter discusses how the effects of structural labour market reforms depend on whether the economy is in expansion or recession. Based on an empirical time series model with Markov switching that draws on search and matching theory, we propose a novel identification of reform outcomes and distinguish the effects of structural reforms that increase the flexibility of the labour market in distinct phases of the business cycle. We find in applications to Germany and Spain that reforms which are implemented in recessions have weaker expansionary effects in the short run. For policymakers, these results emphasize the costs of introducing labour market reforms in recessions.

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Party System

10.1093/oso/9780199475278.003.0006 ◽

2018 ◽

Author(s):

Zaad Mahmood

Keyword(s):

Labour Market ◽

Party System ◽

Political Competition ◽

Group Analysis ◽

Party Competition ◽

Market Reforms ◽

Intermediate Variable ◽

Labour Market Flexibility ◽

Labour Market Reforms ◽

The Impact

The chapter discusses the party system in the macro context of politics. It highlights the limitations of political party and interest group analysis without reference to the political competition that shapes behaviour in politics. The chapter discusses theoretically the impact of party system on labour market flexibility and proceeds to show the interrelation between party competition and the behaviour of political parties, composition of socio-economic support bases, and the behaviour of interest groups that influence reform. In the context of labour market flexibility, the party-system operates as an intermediate variable facilitating reforms. The chapter contradicts the conventional notion that party system fragmentation impedes reform by showing how increasing party competition corresponds to greater labour market reforms. It shows that increases in the number of parties, facilitates labour market reforms through marginalization of the issue of labour, realignment of class interests within broader society and fragmentation of trade union movement.

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Resurgence of employment growth in the European Union: The role of cycles and labour market reforms

Economics Letters ◽

10.1016/j.econlet.2005.10.015 ◽

2006 ◽

Vol 91 (1) ◽

pp. 61-66 ◽

Cited By ~ 2

Author(s):

Robert Inklaar ◽

Marcel P. Timmer

Keyword(s):

European Union ◽

Labour Market ◽

Employment Growth ◽

Market Reforms ◽

The European Union ◽

Labour Market Reforms

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Understanding the positions taken by moderate union confederations and centre-left parties during labour market reforms in Portugal and Spain: Why the configuration of left parties and trade union confederations matters

European Journal of Industrial Relations ◽

10.1177/09596801211005765 ◽

2021 ◽

pp. 095968012110057

Author(s):

Paulo Marques ◽

Dora Fonseca

Keyword(s):

Labour Market ◽

Trade Union ◽

Stable Equilibrium ◽

Market Reforms ◽

Negative Consequences ◽

Labour Market Reforms ◽

Electoral Support ◽

Over Time ◽

Radical Left

The insider-outsider politics approach conjectures that moderate unions and centre-left parties safeguard the interests of insiders and neglect outsiders in labour market reforms. This article challenges this hypothesis. By comparing the positions taken by centre-left parties and moderate union confederations during labour market reforms in Portugal and Spain (1975–2019), it shows that while they may indeed protect insiders, they sometimes do the opposite. To explain this, the article argues that more attention must be paid to the configuration of left parties and confederations. In Portugal, where communist and radical left parties were strong, the centre-left was afraid of losing outsiders’ electoral support, and thus it did not follow a pro-insider strategy. This was reinforced by the fact that the centre-left had to face the opposition of a strong class-oriented confederation that was not willing to commit to two-tier reforms. This was not what happened in Spain. The centre-left, supported by a union confederation, undertook a two-tier reform in 1984 because there was a different configuration of left parties and confederations. Notwithstanding, this was not a stable equilibrium because this confederation changed its position over time when it realized the negative consequences of these reforms. Henceforth, their strategy became more pro-outsider.

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