Lessons from Successful Labor Market Reformers in Europe

May 1, 2007

Preview Citation

Format: Chicago

Anthony M Annett. Lessons from Successful Labor Market Reformers in Europe, (USA: International Monetary Fund, 2007) accessed July 15, 2025

Disclaimer: This Policy Dicussion Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Employment, Labor, Labor markets, Labor supply, Labor taxes, Taxes, Wages

Keywords: Country, Employment, Employment growth, Europe, Event study, Fiscal adjustment, Labor market, Labor market regulation, Labor markets, Labor supply, Labor taxes, PDP, Political economy, Product market, Product market regulation indices, Product market rigidity, Wage, Wage moderation, Wages

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Policy Discussion Paper No. 2007/001
Stock No:

PPIEA2007001
ISBN:

9781451975352
ISSN:

1564-5193

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