Structural Reforms and Labour-market Outcomes: International Panel-data Evidence

This paper explores the impact of structural reforms on a comprehensive set of macro-level labour-market outcomes, including the unemployment rate, the average wage index, and overall and female employment levels and labour force participation rates. Together, these outcome variables capture the overall health of the labour market and the aggregate welfare of workers. Yet, to our knowledge, 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 labour-market outcomes other than the unemployment rate. After documenting the average trends across countries in the labour-market outcomes up to 10 years on either side of each country's structural reform year, we run fixed-effects ordinary least squares and instrumental variables regressions to account for the likely endogeneity of structural reforms to labour-market outcomes. Overall, the results suggest that structural reforms lead to positive outcomes for labour. Redistributive effects in favour of workers, along the lines of the Stolper-Samuelson effect, may be at work.