## Structural Reforms and Labor Reallocation: A Cross-Country Analysis

_IMF Working Papers, March 19, 2018_

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## Bibliographic details
- Authors: Khalid ElFayoumi, Anta Ndoye, Sanaa Nadeem, Gregory Auclair
- Published: March 19, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484346983.001

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### Research question and methodology
- Objective: Measure the speed of sectoral labor adjustment and quantify how structural reforms affect the costs of labor reallocation from low- to high-productivity sectors.
- Data and approach: Cross-country sector-level data analyzed using a dynamic panel error correction model.

### Key empirical findings
- Convergence speed: On average, sectoral employment shares converge towards equilibrium allocations, closing about 13.7 percent of labor productivity gaps each year.
- Heterogeneity: The speed of labor adjustment varies across sectors and income groups.
- Structural reform associations: More efficient labor reallocation is significantly associated with:
  - financial market liberalization
  - less bureaucracy
  - strong judicial and regulatory environment
  - trade liberalization
  - better education
  - more flexible labor and product markets

### Policy implications and recommendations
- Promote financial market liberalization to reduce frictions in labor reallocation.
- Reduce bureaucratic barriers to facilitate movement of labor across sectors.
- Strengthen judicial and regulatory frameworks to support efficient reallocation.
- Advance trade liberalization to lower barriers that impede sectoral shifts.
- Invest in education to improve worker mobility and sectoral matching.
- Implement reforms to increase flexibility in labor and product markets.

### Publication and document identifiers
- Authors: Khalid ElFayoumi, Anta Ndoye, Sanaa Nadeem, Gregory Auclair
- Date: March 19, 2018
- Series: Working Paper No. 2018/064
- Volume: 2018
- Issue: 064
- Pages: 41
- DOI: https://doi.org/10.5089/9781484346983.001
- Stock No: WPIEA2018064
- ISBN: 9781484346983
- ISSN: 1018-5941

*IMF Working Paper — Structural Reforms and Labor Reallocation: A Cross-Country Analysis*

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## Content in this bundle

- **Structural Reforms and Labor Reallocation: A Cross-Country Analysis, WP/18/64, March 2018**
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_Source: https://www.imf.org/en/publications/wp/issues/2018/03/19/structural-reforms-and-labor-reallocation-a-cross-country-analysis-45717_