On the Impact of Structural Reforms on Output and Employment
On the Impact of Structural Reforms on Output and Employment

Author: Luiza Antoun de Almeida

Publisher: International Monetary Fund

Published: 2018-04-06

Total Pages: 35

ISBN-13: 1484351770

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This paper analyzes the effects of selected structural reforms on output and employment in the short and medium term. It uses a comprehensive cross-country firm-level dataset covering both advanced and emerging market economies over the period 2003-2014. In line with previous studies, it finds that structural reforms have in general a positive impact on output and employment in the medium term. Furthermore, the paper also assesses whether the impact of structural reforms varies with firm-specific characteristics, such as size, leverage, profitability, and sector. We find evidence that firm characteristics do influence the effectiveness of structural reforms. These findings have relevant policy implications as they help policymakers tailor the design of structural reforms to maximize their payoffs, taking into account their heterogeneous impact on firms.

Structural Reforms, Productivity and Technological Change in Latin America
Structural Reforms, Productivity and Technological Change in Latin America

Author: Jorge M. Katz

Publisher: United Nations Publications

Published: 2001

Total Pages: 164

ISBN-13:

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In the last ten to fifteen years, profound structural reforms have moved Latin America and the Caribbean from closed, state-dominated economies to ones that are more market-oriented and open. Policymakers expected that these changes would speed up growth. This book is part of a multi-year project to determine whether these expectation have been fulfilled. Focusing on technological change, the impact of the reforms on the process of innovation is examined. It notes that the development process is proving to be highly heterogenous across industries, regions and firms and can be described as strongly inequitable. This differentiation that has emerged has implications for job creation, trade balance, and the role of small and medium sized firms. This ultimately suggests, amongst other things, the need for policies to better spread the use of new technologies.

Structural Reforms and Firms’ Productivity: Evidence from Developing Countries
Structural Reforms and Firms’ Productivity: Evidence from Developing Countries

Author: Wilfried A. Kouamé

Publisher: International Monetary Fund

Published: 2018-03-19

Total Pages: 42

ISBN-13: 1484347005

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This paper assesses the effects of structural reforms on firm-level productivity for 37 developing countries from 2006 to 2014 period. It takes advantage of the IMF Monitoring of Fund Arrangements dataset for reform indexes and the World Bank Enterprise Surveys for firm-level productivity. The paper highlights the following results. Structural reforms such as financial, fiscal, real sector, and trade reforms, significantly improve firm-level productivity. Interestingly, real sector reforms have the most sizeable effects on firm-level productivity. The relationship between structural reforms and firm-level productivity is nonlinear and shaped by some firms’ characteristics such as the financial access, the distortionary environment, and the size of firms. The pace of structural reforms matters since being a “strong reformer” is associated with a clear productivity dividend for firms. Finally, except for financial and trade reforms, all structural reforms under consideration are bilaterally complementary in improving firm-level productivity. These findings are robust to several sensitivity checks.

Structural Reforms and Economic Performance in Advanced and Developing Countries
Structural Reforms and Economic Performance in Advanced and Developing Countries

Author: Mr.Jonathan David Ostry

Publisher: International Monetary Fund

Published: 2009-10-15

Total Pages: 62

ISBN-13: 1589068181

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This volume examines the impact on economic performance of structural policies-policies that increase the role of market forces and competition in the economy, while maintaining appropriate regulatory frameworks. The results reflect a new dataset covering reforms of domestic product markets, international trade, the domestic financial sector, and the external capital account, in 91 developed and developing countries. Among the key results of this study, the authors find that real and financial reforms (and, in particular, domestic financial liberalization, trade liberalization, and agricultural liberalization) boost income growth. However, growth effects differ significantly across alternative reform sequencing strategies: a trade-before-capital-account strategy achieves better outcomes than the reverse, or even than a "big bang"; also, liberalizing the domestic financial sector together with the external capital account is growth-enhancing, provided the economy is relatively open to international trade. Finally, relatively liberalized domestic financial sectors enhance the economy's resilience, reducing output costs from adverse terms-of-trade and interest-rate shocks; increased credit availability is one of the key mechanisms.

When Do Structural Reforms Work? On the Role of the Business Cycle and Macroeconomic Policies
When Do Structural Reforms Work? On the Role of the Business Cycle and Macroeconomic Policies

Author: MissAnna Rose Bordon

Publisher: International Monetary Fund

Published: 2016-03-15

Total Pages: 28

ISBN-13: 151358992X

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Structural reforms are expected to lift growth and employment, but their effects are surprisingly difficult to pin down empirically. One reason is their potential endogeneity to the economic environment in which they are conducted. For example, the impact of a reform implemented shortly before a cyclical upswing is difficult to distinguish from the recovery itself. Similarly, macroeconomic policies conducted along a structural reform could affect the estimated impact. Exploring various options, this paper develops robust estimates of the impact of labor and product market reforms by using local projection techniques while controlling for endogeneity of reforms and other biases. The results suggest that labor and product market reforms have a lagged but positive impact on employment creation, and the positive effect remains even after controlling for the endogeneity of the decision to reform. Supportive macroeconomic policies are found to increase the effect of labor and product market reforms, consistent with the view that some structural reforms are best initiated in conjunction with supportive fiscal or monetary policy.

Law and Employment
Law and Employment

Author: James J. Heckman

Publisher: University of Chicago Press

Published: 2007-11-01

Total Pages: 585

ISBN-13: 0226322858

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Law and Employment analyzes the effects of regulation and deregulation on Latin American labor markets and presents empirically grounded studies of the costs of regulation. Numerous labor regulations that were introduced or reformed in Latin America in the past thirty years have had important economic consequences. Nobel Prize-winning economist James J. Heckman and Carmen Pagés document the behavior of firms attempting to stay in business and be competitive while facing the high costs of complying with these labor laws. They challenge the prevailing view that labor market regulations affect only the distribution of labor incomes and have little or no impact on efficiency or the performance of labor markets. Using new micro-evidence, this volume shows that labor regulations reduce labor market turnover rates and flexibility, promote inequality, and discriminate against marginal workers. Along with in-depth studies of Colombia, Peru, Brazil, Argentina, Chile, Uruguay, Jamaica, and Trinidad, Law and Employment provides comparative analysis of Latin American economies against a range of European countries and the United States. The book breaks new ground by quantifying not only the cost of regulation in Latin America, the Caribbean, and in the OECD, but also the broader impact of this regulation.

Growth and Structural Transformation
Growth and Structural Transformation

Author: Kwang Suk Kim

Publisher: BRILL

Published: 2020-03-17

Total Pages: 224

ISBN-13: 1684172195

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This study provides a comprehensive overview of Korea’s macroeconomic growth and structural change since World War II, and traces some of the roots of development to the colonial period. The authors explore in detail colonial development, changing national income patterns, relative price shifts, sources of aggregate growth, and sources of sectoral structural change, comparing them with other countries.

The Impact of Structural Reforms on Poverty
The Impact of Structural Reforms on Poverty

Author: Neil McCulloch

Publisher: World Bank Publications

Published: 2003

Total Pages: 48

ISBN-13:

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Structural reforms are often designed to change the prices of key goods and services. Since the overall intention of such reforms is the reduction of poverty, it is important to understand how the resulting price changes affect the poor. However, organizations seeking to provide timely advice to policymakers in developing countries often do not have the data and resources needed to undertake the most sophisticated approaches to such analysis. McCulloch outlines a simple methodology based on the analysis of household survey data to estimate the first-order impact of a variety of structural reforms. He also elaborates on the ways in which this methodology may be extended in a flexible way to account for particular features of a country in question. Finally, he outlines the direction of some extensions on the approach to tackle dynamics, risk, and qualitative poverty analysis.

Employment Protection Deregulation and Labor Shares in Advanced Economies
Employment Protection Deregulation and Labor Shares in Advanced Economies

Author: Gabriele Ciminelli

Publisher: International Monetary Fund

Published: 2018-08-16

Total Pages: 72

ISBN-13: 1484373723

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Labor market deregulation, intended to boost productivity and employment, is one plausible, yet little studied, driver of the decline in labor shares that took place across most advanced economies since the early 1990s. This paper assesses the impact of job protection deregulation in a sample of 26 advanced economies over the period 1970-2015, using a newly constructed dataset of major reforms to employment protection legislation for regular contracts. We apply the local projection method to estimate the dynamic response of the labor share to our reform events at both the country and the country-industry levels. For the latter, we employ a differences-in-differences identification strategy using two identifying assumptions grounded in theory—namely that job protection deregulation should have larger negative effects in industries characterized by (i) a higher “natural” propensity to adjust the workforce, and (ii) a lower elasticity of substitution between capital and labor. We find a statistically significant, economically large and robust negative effect of deregulation on the labor share. In particular, illustrative back-of-the-envelope calculations suggest that job protection deregulation may have contributed about 15 percent to the average labor share decline in advanced economies. Together with existing evidence regarding the macroeconomic gains from job protection and other labor market reforms, our results also point to the need for policymakers to address efficiency-equity trade-offs when designing such reforms.