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Structural reforms in Europe and the (in)coherence of institutions

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Abstract

The aim of this article is to analyse the consequences of some structural reforms on the institutional coherence of OECD countries, particularly Continental Europe, and on their economic performance, particularly employment. Because institutions in developed political economies are interrelated through a complex network of complementarities, institutional change has consequences beyond the area concerned by a reform. This also implies that there are complementarity effects in reforms themselves. A challenge of reform programs is therefore to achieve a new type of complementarities between reformed institutions. The paper presents empirical evidence questioning the compatibility of the ongoing structural reforms in product and labour markets with the existing institutional structures in some OECD countries. The coherence of the flexicurity strategy, i.e. a combination of labour market flexibility and generous welfare state, is also questioned, both from economic efficiency and political economy points of view.

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Paper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number r08063.

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Length: 29 pages
Date of creation: Jul 2008
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Handle: RePEc:mse:cesdoc:r08063

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Keywords: Structural reforms; models of capitalism; flexicurity.;

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  1. Dean Baker & Andrew Glyn & David Howell & John Schmitt, 2002. "Labor Market Institutions and Unemployment: A Critical Assessment of the Cross-Country Evidence," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 2002-17, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
  2. Jorge Braga de Macedo & Joaquim Oliveira Martins, 2006. "Growth, Reform Indicators and Policy Complementaries," NBER Working Papers 12544, National Bureau of Economic Research, Inc.
  3. Aoki, Masahiko, 1994. "The Contingent Governance of Teams: Analysis of Institutional Complementarity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(3), pages 657-76, August.
  4. Richard Freeman, 2005. "Labour market institutions without blinders: The debate over flexibility and labour market performance," International Economic Journal, Taylor & Francis Journals, vol. 19(2), pages 129-145.
  5. Amable, Bruno & Gatti, Donatella, 2004. "The Political Economy of Job Protection and Income Redistribution," IZA Discussion Papers 1404, Institute for the Study of Labor (IZA).
  6. Amable, Bruno & Demmou, Lilas & Gatti, Donatella, 2007. "Employment Performance and Institutions: New Answers to an Old Question," IZA Discussion Papers 2731, Institute for the Study of Labor (IZA).
  7. Nickell, Stephen, 1999. "Product markets and labour markets1," Labour Economics, Elsevier, vol. 6(1), pages 1-20, March.
  8. Bruno Amable & Donatella Gatti, 2004. "Product market competition, job security, and aggregate employment," Oxford Economic Papers, Oxford University Press, vol. 56(4), pages 667-686, October.
  9. Amable, Bruno & Gatti, Donatella, 2004. "Labour and Product Market Reforms: A Case for Policy Complementarity," IZA Discussion Papers 1190, Institute for the Study of Labor (IZA).
  10. Amable, Bruno, 2003. "The Diversity of Modern Capitalism," OUP Catalogue, Oxford University Press, number 9780199261147.
  11. Saint-Paul, Gilles, 2000. "The Political Economy of Labour Market Institutions," OUP Catalogue, Oxford University Press, number 9780198293323.
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Cited by:
  1. David R. Howell, 2010. "Institutions, Aggregate Demand and Cross-Country Employment Performance: Alternative Theoretical Perspectives and the Evidence," Working Papers wp228, Political Economy Research Institute, University of Massachusetts at Amherst.
  2. Alberto Chilosi, 2014. "Long-Term Unemployment in the Varieties of Capitalism," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 17(1), pages 69-78, May.
  3. Baptiste Françon & Michaël Zemmour, 2013. "What shapes the generosity of short- and long-term benefits? A political economy approach," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00821083, HAL.
  4. Bruno Amable & Elvire Guillaud & Stefano Palombarini, 2011. "The political economy of neo-liberalism in Italy and France," Documents de travail du Centre d'Economie de la Sorbonne 11051, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  5. repec:hal:journl:halshs-00639450 is not listed on IDEAS
  6. repec:hal:cesptp:halshs-00639450 is not listed on IDEAS
  7. Bruno Amable, 2014. "The unsolved contradictions of the modernists. Economic policy expectations and political crisis in France 1978-2012," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00973926, HAL.
  8. Hans Pitlik & Margit Schratzenstaller, 2011. "Growth Implications of Structure and Size of Public Sectors," WIFO Working Papers 404, WIFO.
  9. Baptiste Françon & Michaël Zemmour, 2013. "What shapes the generosity of short- and long-term benefits? A political economy approach," Documents de travail du Centre d'Economie de la Sorbonne 13027, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.

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