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This article appears in the following Oxford Review of Economic Policy issue: CAPITALISM AND INEQUALITY [View the issue table of contents]
Structural reforms in Europe and the (in)coherence of institutions
* Centre d’Economie de la Sorbonne, University of Paris I, and CEPREMAP, e-mail: bruno.amable{at}ens.fr
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Abstract |
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The aim of this paper is to analyse the consequences of some structural reforms on the institutional coherence of OECD countries, particularly in Continental Europe, and on their economic performance, particularly as regards employment. Because institutions in developed political economies are interrelated through a complex network of complementarities, institutional change has consequences beyond the area concerned in a reform. This also implies that there are complementarity effects in reforms themselves. A challenge of reform programmes is therefore to achieve a new type of complementarity between reformed institutions. The paper presents empirical evidence questioning the compatibility of the ongoing structural reforms in product and labour markets with the existing institutional structures in some OECD countries. The coherence of the flexicurity strategy, i.e. a combination of labour-market flexibility and a generous welfare state, is also questioned, from the point of view of both economic efficiency and political economy.
Key Words: political economy • structural reforms • institutional complementarity • flexicurity
1 It must be noted that different divisions within the OECD make different recommendations in terms of structural reforms.
2 The list of the 24 Guidelines is given in the Appendix.
3 See Amable (2007) for an analysis of the Lisbon Agenda.
4 In combination with product-market reforms; see Guideline No. 5.
5 The use of other OECD indicators does not substantially alter the results.
6 The ratio of assets of institutional investors to GDP.
7 The partisan position of the government is constructed on the basis of the 2002 version of the PGL File Collection by Thomas R. Cusack and Lutz Engelhardt of the Wissenschaftszentrum Berlin für Sozialforschung. Their dataset provides variables for numerous political parties reflecting the relative frequency of statements in party manifestos on characteristic economic and non-economic political topics. It is possible to construct a continuous variable expressing the position of a party on a left–right axis. The position of the government is the weighted average of the positions of governing coalition parties (Amable et al., 2006).
8 Representing 34.2 per cent of the variance.
9 Again, partisan position is all the more positive that the governing coalition is right-wing.
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