Cover Staff Discussion Notes
Buy Book in Print
Labor and Product Market Reforms in Advanced Economies: Fiscal Costs, Gains, and Support
Author:
Angana Banerji
Search for other papers by Angana Banerji in
Current site
Google Scholar Close
,
Mr. Valerio Crispolti
Search for other papers by Mr. Valerio Crispolti in
Current site
Google Scholar Close
,
Ms. Era Dabla-Norris
Search for other papers by Ms. Era Dabla-Norris in
Current site
Google Scholar Close
,
Mr. Romain A Duval
Search for other papers by Mr. Romain A Duval in
Current site
Google Scholar Close
https://orcid.org/0000-0002-2775-7172
,
Mr. Christian H Ebeke
Search for other papers by Mr. Christian H Ebeke in
Current site
Google Scholar Close
,
Davide Furceri null

Search for other papers by Davide Furceri in
Current site
Google Scholar Close
,
Mr. Takuji Komatsuzaki
Search for other papers by Mr. Takuji Komatsuzaki in
Current site
Google Scholar Close
, and
Mr. Tigran Poghosyan
Search for other papers by Mr. Tigran Poghosyan in
Current site
Google Scholar Close
Series:
Staff Discussion Notes
Volume/Issue:
Volume 2017: Issue 003
Language:
English
Publication Date:
13 Mar 2017
DOI:
https://doi.org/10.5089/9781475583977.006
ISBN:
9781475583977
ISSN:
2617-6750
Pages:
120
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
Legal-disclaimer:
Staff Discussion Notes (SDNs) showcase policy-related analysis and research being developed by IMF staff members and are published to elicit comments and to encourage debate.The views expressed in this Policy Discussion Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy.
Download PDF (3.8 MB) Download Epub
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.
  • Collapse
  • Expand
Cover Staff Discussion Notes
Staff Discussion Notes
ISSN:
2617-6750
Publisher:
International Monetary Fund