An empirical investigation of political economy factors behind structural reforms in Oecd countries

This work attempts to identify the political economy drivers of structural policy changes in OECD countries’ labour and product markets over the 1980-2003 period. The focus is on both factors that are beyond the control of governments (i.e., that are exogenous to the political process) and factors over which governments may have some leverage. The core empirical results, based on a set of policy indicators that cover 21 countries, suggest that the most important factors that influence the implementation of structural reform are economic crises, exposure to foreign competition, government’s duration in office, budgetary conditions and spillovers across policy areas, in particular from the product to the labour market.