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....

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Bibliographic Details
Main Authors:	Hollweg, Claire H., Lederman, Daniel, Mitra, Devashish
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank Group, Washington, DC 2014
Subjects:	ADJUSTMENT COSTS ADVERSE CONSEQUENCES AGGREGATE DEMAND ASSETS ATTRITION AVERAGE UNEMPLOYMENT AVERAGE WAGE BASE YEAR BLACK MARKET BLACK MARKET EXCHANGE RATE BUDGET DEFICIT BUDGET DEFICITS CAPITAL MARKETS COMPARATIVE ADVANTAGE COMPETITIVE MARKET COMPETITIVENESS CONSTANT RETURNS TO SCALE CONSUMER PRICE INDEX CONTROL VARIABLES COUNTRY FIXED EFFECT COUNTRY FIXED EFFECTS CROSS-COUNTRY STUDIES CROSS-COUNTRY STUDY DEBT DEBT CRISES DEBT CRISIS DEMOCRACY DEPENDENT VARIABLE DEPENDENT VARIABLES DEREGULATION DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISCOURAGED WORKERS DUMMY VARIABLE DUMMY VARIABLES ECONOMETRIC EVIDENCE ECONOMETRIC MODELS ECONOMIC ENVIRONMENT ECONOMIC GROWTH ECONOMIC POLICIES ECONOMIC POLICY ECONOMIC REFORM ECONOMIC RESEARCH ECONOMIC THEORY EMPLOYMENT INCREASE EMPLOYMENT LEVEL EMPLOYMENT LEVELS EMPLOYMENT PATTERNS ENDOGENOUS VARIABLE EQUILIBRIUM UNEMPLOYMENT ERROR TERM EXOGENOUS VARIABLES EXPLANATORY VARIABLE EXPORT GOOD EXPORTS EXTERNAL DEBT EXTERNAL TERMS OF TRADE FEDERAL RESERVE FEMALE EMPLOYMENT FEMALE LABOR FEMALE LABOR FORCE FINANCIAL CRISIS FIRM PRODUCTIVITY FIRM SURVIVAL FISCAL DEFICIT FISCAL REFORM FOREIGN CURRENCY FREE TRADE FREE TRADE AGREEMENT FREER TRADE FULL EMPLOYMENT GENERAL EQUILIBRIUM GLOBAL INTEGRATION GLOBALIZATION HIGH INFLATION HIGH UNEMPLOYMENT HIGH UNEMPLOYMENT RATES IMPORT IMPORTS INCOME INCREASING RETURNS INCREASING RETURNS TO SCALE INDUSTRY WAGE INDUSTRY WAGES INFLATION RATES INFORMAL SECTOR INSTRUMENTAL VARIABLES INTEREST RATE INTEREST RATES INTERNATIONAL ECONOMICS INTERNATIONAL FINANCIAL STATISTICS INTERNATIONAL TRADE JOB CREATION JOB DESTRUCTION JOB DESTRUCTION RATE JOB SEARCH JOBS LABOR DEMAND LABOR ECONOMICS LABOR FORCE LABOR FORCE PARTICIPATION LABOR MARKET LABOR MARKET OUTCOMES LABOR MARKET RIGIDITIES LABOR MARKETS LABOR ORGANIZATION LABOR REALLOCATION LABOR RELATIONS LABOUR LABOUR MARKET LABOUR MARKET INSTITUTIONS LABOUR MARKET POLICIES LOCAL LABOR MARKET LOCAL LABOR MARKETS LOW UNEMPLOYMENT LOW UNEMPLOYMENT RATE LOW-INCOME COUNTRIES MACROECONOMIC CONDITIONS MACROECONOMIC PERFORMANCE MACROECONOMIC POLICIES MACROECONOMIC SHOCKS MACROECONOMIC STABILIZATION MANUFACTURING INDUSTRIES MARGINAL PRODUCT MOBILITY OF LABOR MONOPOLISTIC COMPETITION MONOPOLY NATURAL RATE OF UNEMPLOYMENT NET JOB CREATION OPEN ECONOMIES PERFECT COMPETITION POLITICAL ECONOMY POLITICAL PARTICIPATION POLITICAL PROCESS POSITIVE EFFECTS PREVIOUS STUDIES PRICE INCREASES PRIVATIZATION PRODUCT MARKET PRODUCT MARKET COMPETITION PRODUCTIVE FIRMS PRODUCTIVITY LEVEL PUBLIC DEBT PUBLIC GOOD REAL GDP REAL WAGE REAL WAGES REALLOCATION EFFECT REDISTRIBUTIVE EFFECTS REJECTION RELATIVE PRICE SHORT-TERM DEBT SPEED OF ADJUSTMENT STEADY STATE STOCK MARKET STOCK MARKET CRASH STRUCTURAL REFORM STRUCTURAL REFORMS STRUCTURAL UNEMPLOYMENT TAX REFORMS TECHNICAL ASSISTANCE TOTAL EMPLOYMENT TOTAL EXTERNAL DEBT TOTAL FACTOR PRODUCTIVITY TOTAL LABOR FORCE TRADE LIBERALIZATION TRADE OPENNESS TRADE POLICIES TRADE POLICY TRADE PROTECTION TRADE REFORMS TRADING PARTNERS TRANSPORT TREASURY BILL UNCERTAINTY UNEMPLOYED UNEMPLOYMENT UNEMPLOYMENT LEVELS UNEMPLOYMENT RATE UNEMPLOYMENT RATES UNSKILLED LABOR UNSKILLED WORKERS VALUE INDEXES VOTERS WAGE BARGAINING WAGE DATA WAGE INEQUALITY WAGE PREMIUMS WAGE RATE WAGE STRUCTURE WORKER WORKERS WORLD DEVELOPMENT INDICATORS WORLD ECONOMY WORLD INTEREST RATE WORLD INTEREST RATES WORLD PRICE
Online Access:	http://documents.worldbank.org/curated/en/2014/11/20426606/structural-reforms-labor-market-outcomes-international-panel-data-evidence http://hdl.handle.net/10986/20642

Description
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.

Structural Reforms and Labor Market Outcomes : International Panel Data Evidence

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