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Europe > Ireland

You are looking at 1 - 10 of 12 items for :

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Cover IMF Working Papers
Distributional Implications of Labor Market Reforms: Learning from Spain's Experience
Ara Stepanyan
and
Jorge Salas
Spain’s structural reforms, implemented around 2012, have arguably contributed to a faster and stronger economic recovery. In particular, there is strong evidence that the 2012 labor market reforms increased wage flexibility, which helped the Spanish economy to regain competitiveness and create jobs. But the impact of these labor reforms on income inequality and social inclusion has not been analyzed much. This paper aims to shed light on this issue by employing an econometric decomposition procedure combined with the synthetic control method. The results indicate that the 2012 labor reforms have helped improve employment and income equality outcomes with no substantial impact on the overall risk of poverty. Nevertheless, the reforms appear to have induced a deterioration of average hours worked, in-work poverty, and possibly also of involuntary part-time employment.
Keywords:
WP; income; employment growth; Spain; employment outcome; employment protection regulation; part-time employment; reform date; structural reforms; labor market reforms; income inequality; social inclusion; synthetic control method; employment protection reform; product market reform; labor market inclusiveness; Employment; Income distribution; Global
Cover IMF Working Papers
The (Subjective) Well-Being Cost of Fiscal Policy Shocks
Kodjovi M. Eklou
and
Mamour Fall
Do discretionary spending cuts and tax increases hurt social well-being? To answer this question, we combine subjective well-being data covering over half a million of individuals across 13 European countries, with macroeconomic data on fiscal consolidations. We find that fiscal consolidations reduce individual well-being in the short run, especially when they are based on spending cuts. In addition, we show that accompanying monetary and exchange rate policies (disinflation, depreciations and the liberalization of capital flows) mitigate the well-being cost of fiscal consolidations. Finally, we investigate the well-being consequences of the two well-knowns expansionary fiscal consolidations episodes taking place in the 80s (in Denmark and Ireland). We find that even expansionary fiscal consolidations can have well-being costs. Our results may therefore shed some light on why some governments may choose to consolidate through taxes even at the cost of economic growth. Indeed, if spending cuts are to generate a large well-being loss, they can trigger an opposition and protest against a fiscal consolidation plan and hence making it politically costly.
Keywords:
WP; public goods; well-being cost; inflation rate; fiscal policy shock; substitution effect; effect of fiscal consolidations; dampening effect; spending cut size; recessionary effect; Fiscal consolidation; Income inequality; Consumption taxes; Active labor market policies; Europe; Fiscal Consolidations; Subjective Well-Being; Spending cuts; Tax hikes
Cover IMF Working Papers
The Structural Determinants of the Labor Share in Europe
Dilyana Dimova
The labor share in Europe has been on a downward trend. This paper finds that the decline is concentrated in manufacture and among low- to mid-skilled workers. The shifting nature of employment away from full-time jobs and a rollback of employment protection, unemployment benefits and unemployment benefits have been the main contributors. Technology and globalization hurt sectors where jobs are routinizable but helped others that require specialized skills. High-skilled professionals gained labor share driven by productivity aided by flexible work environments, while low- and mid-skilled workers lost labor share owing to globalization and the erosion of labor market safety nets.
Keywords:
WP; skilled worker; import penetration; employment share; further labor share erosion; labor market; labor share erosion; labor share shrinkage; labor share stagnation; share data; share decline; wage share; labor share; technology; employment policies; globalization; shift share analysis; labor share contraction; labor share growth; labor share shrink; labor share stem; self-employment share; labor share come; labor share tend; labor share fluctuation; Employment; Employment protection; Unemployment benefits; Global; Baltics; Europe
Cover IMF Working Papers
Job Protection Deregulation in Good and Bad Times
Mr. Romain A Duval
,
Davide Furceri
, and
João Tovar Jalles
This paper explores the short-term employment effect of deregulating job protection for regular workers and how it varies with prevailing business cycle conditions. We apply a local projection method to a newly constructed “narrative” dataset of major regular job protection reforms covering 26 advanced economies over the past four decades. The analysis relies on country-sector-level data, using as an identifying assumption the fact that stringent dismissal regulations are more binding in sectors that are characterized by a higher “natural” propensity to regularly adjust their workforce. We find that the responses of sectoral employment to large job protection deregulation shocks depend crucially on the state of the economy at the time of reform——they are positive in an expansion, but become negative in a recession. These findings are consistent with theory, and are robust to a broad range of robustness checks including an Instrumental Variable approach using political economy drivers of reforms as instruments. Our results provide a case for undertaking job protection reform in good times, or for designing it in ways that enhance its short-term impact.
Keywords:
WP; business cycle; EPL reform; differential employment effect; labour market; layoff rate; Structural Reforms; Labor Market; Deregulation; Employment Protection; Growth; Employment; severance pay; Business cycles; Labor market frictions; Southern Europe
Cover Staff Discussion Notes
Labor and Product Market Reforms in Advanced Economies: Fiscal Costs, Gains, and Support
Angana Banerji
,
Mr. Valerio Crispolti
,
Ms. Era Dabla-Norris
,
Mr. Romain A Duval
,
Mr. Christian H Ebeke
,
Davide Furceri
,
Mr. Takuji Komatsuzaki
, and
Mr. Tigran Poghosyan
Product and labor market reforms are needed to lift persistently sluggish growth in advanced economies. But reforms have progressed slowly because of concerns about their distributive and short-term economic effects. Our analysis, based on new empirical and numerical analysis and country case-studies shows that most labor and product market reforms can improve public debt dynamics over the medium-term. This because reforms raise output by boosting employment and/or labor productivity. But the effect of some labor market reforms on budgetary outcomes and fiscal sustainability depends critically on business cycle conditions. Our evidence also suggests that some temporary and well-designed up-front fiscal stimulus can help enhance the economic impact of reforms. In the past, countries have used fiscal incentives in the past to facilitate reforms by alleviating transition and social costs. But strong ownership of reforms was crucial for their successful implementation.
Keywords:
SDN; product market reform; Fiscal Policy; Structural Reforms; Public Debt; Labor Market; Product Market; Deregulation; Employment Protection; Unemployment Benefits; Labor Tax; Active Labor Market Policy; self-financing condition; financing burden; product market deregulation; Fiscal stimulus; Labor market reforms; Employment; Global
Cover IMF Working Papers
Can Reform Waves Turn the Tide? Some Case Studies Using the Synthetic Control Method
Bibek Adhikari
,
Mr. Romain A Duval
,
Bingjie Hu
, and
Mr. Prakash Loungani
A number of advanced economies carried out a sequence of extensive reforms of their labor and product markets in the 1990s and early 2000s. Using the Synthetic Control Method (SCM), this paper implements six case studies of well-known waves of reforms, those of New Zealand, Australia, Denmark, Ireland and Netherlands in the 1990s, and the labor market reforms in Germany in the early 2000s. In four of the six cases, GDP per capita was higher than in the control group as a result of the reforms. No difference between the treated country and its synthetic counterpart could be found in the cases of Denmark and New Zealand, which in the latter case may have partly reflected the implementation of reforms under particularly weak macroeconomic conditions. Overall, also factoring in the limitations of the SCM in this context, the results are suggestive of a positive but heterogenous effect of reform waves on GDP per capita.
Keywords:
WP; labor market; real GDP; product market; fiscal policy; structural reforms; synthetic control method; liberalization; labor and productivity market reforms; growth; heads of state government; State life insurance insurance company; industrial relations; government's share; predictive power; reform package; donor country; untreated country; income support; firm level; life insurance insurance company; Labor market reforms; Competition; Active labor market policies; Unemployment; Europe; Global
Cover IMF Staff Country Reports
Greece: Selected Issues
International Monetary Fund. European Dept.
Rigidities in Greece’s product and labor markets leading to economic imbalances and the significance of reforms to these markets are played out in the first paper. The second paper describes the problems, progress to date, and agenda for work in Greece’s revenue administration and how this effort has been achieved primarily by raising tax rates to high levels and reducing wages, pensions, and other spending. The third paper is on the need for designing and implementing debt restructuring frameworks as well as improving banks’ loan resolution practices so that Greece’s banks are positioned to support the economic recovery.
Keywords:
ISCR; CR; product market; labor market; firm; Greece; product market reform; adjustment cost; revenue administration; flexibility indicator; labor market reform; administration reform; Credit; Commodity markets; Nonperforming loans; Tax administration core functions; Global; Eastern Europe; Baltics
Cover IMF Working Papers
Determinants of Inflation in the Euro Area: The Role of Labor and Product Market Institutions
Mrs. Hanan Morsy
and
Ms. Florence Jaumotte
While inflation differentials in a monetary union can be benign, reflecting a catch-up process, or an adjustment mechanism to asymmetric shocks or different business cycles, they may also indicate distortions related to inefficiencies in domestic product and labor markets that amplify or make more persistent the impact of shocks on inflation. The paper examines the determinants of inflation differentials in the euro area, with emphasis on the role of country specific labor and product market institutions. The analysis uses a traditional backward-looking Phillips curve equation and augments it to explore the role of collective bargaining systems, union density, employment protection, and product market regulation. The model is estimated over a panel dataset of 10 euro area countries over the period 1983-2007. Results show that high employment protection, intermediate coordination of collective bargaining, and high union density increase the persistence of inflation. Oil and raw materials price shocks are also more likely to be accommodated by wage increases when the degree of coordination in collective bargaining is intermediate. These results are robust to different estimation methods, model specifications, and outliers. The paper suggests that reforming labor market institutions may improve the functioning of the euro area by reducing the risk of persistent inflation differentials.
Keywords:
WP; inflation differential; lag inflation; inflation expectation; product market institution; Inflation; inflation differentials; inflation persistence; euro area; labor and product market institutions; regulations; high-inflation country; Output gap; Employment protection; Labor market institutions; Europe
Cover IMF Working Papers
The Spanish Labor Market in a Cross-Country Perspective
Ms. Florence Jaumotte
The Spanish labor market is not working: the unemployment rate is structurally very high; wages are not very responsive to labor market conditions, causing a high cyclicality of unemployment; and the labor market is highly dual. Compared with the EU15, Spanish labor market institutions and policies stand out by the structure of its collective bargaining, which occurs mostly at an intermediate level, and by very high severance payments for permanent workers. Based on a quantitative analysis, the paper shows that moving away from the intermediate level of bargaining would go a long way toward bringing the unemployment rate closer to the EU15 average. The key reform needed to reduce the share of temporary workers is reducing employment protection of permanent workers. Substantially reforming the collective bargaining system and reducing the protection of permanent workers are likely to be highly complementary to secure a substantial reduction in the unemployment rate. The recent 2010 labor market reform attempts to address these issues, although its effects are still to materialize.
Keywords:
WP; labor market; share of temporary workers; equilibrium unemployment; wage agreement
Cover IMF Working Papers
Cyclical Behavior of Inventories and Growth Projections Recent Evidence From Europe and the United States
Mr. Willy A Hoffmaister
and
Mr. Jens R Clausen
In the United States and a few European countries, inventory behavior is mainly the outcome of demand shocks: a standard buffer-stock model best characterizes these economies. But most European countries are described by a modified buffer-stock model where supply shocks dominate. In contrast to the United States, inventories boost growth with a one-year lag in Europe. Moreover, inventories provide limited information to improve growth forecasts particularly when a modified buffer-stock model characterizes inventory behavior.
Keywords:
WP; stock; inventory behavior; buffer-stock model; Inventories; business cycle; forecasting; inventory investment; foresight inventory model; stylized fact; inventory change; inventories stem; Production growth; Business cycles; Employment protection; Vector autoregression; Supply shocks; Europe