ESRI Seminar: Labour and Product Market Reforms in Advanced Economies: Fiscal Costs, Gains and Support
Guest Speaker: Davide Furceri, International Monetary Fund
Abstract
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.
Davide Furceri
Davide Furceri is an economist at the IMF's Research Department. He previously worked as an economist at the European Central Bank and at the Organization for Economic Co-operation and Development. He has published extensively in academic journals in the area of macroeconomics, public finance and international macroeconomics. He holds a Ph.D. in Economics from the University of Illinois and a doctoral degree in Regional Economics from the University of Palermo.