Structural reforms for long-term growth. September 30, 2013. Zuzana Šmídová, OECD. What drives economic growth?. Uneven convergence in labour productivity levels over past decade. Difference vis-à-vis upper half of OECD countries GDP pc Labour utilisation Productivity.
Uneven convergence in labour productivity levels over past decade
Difference vis-à-vis upper half of OECD countries GDP pc Labour utilisation Productivity
How to improve labour utilisation?
Long term unemployment a concern since the crisis
Improving labour utilisation Unemployment benefit schemes Active labour market policies Labour taxation (second income earners, older workers, AETR, METR, …) Labour market regulations and collective wage agreements Retirement and disability schemes
Unemployment benefit schemes
Unemployment benefit schemes
Active labour market policies
Retirement and disability schemes Official retirement age vs contributory period Unemployment of older workers (50+) Drawing a pension and/or working Working – is my pension increasing?, what tax, ssc do I pay? How long will I enjoy the pension (life expectancy, years spent in healthy life)?
Men’s pensionable age in OECD
Labour taxation – average tax wedge
Employment protection legislation
How to improve productivity? More competition and better business environment– easing restrictions for entry to markets Increase human capital – education Improve general allocation of resources – cuts in state subsidies, better functioning of financial markets Framework conditions – general business environment, tax systems, innovation support policies.
Product market regulation (PMR) Indicators measuring PMR: de jure, internationally comparable, with historical data (1998, 2003, 2008, 2013) state control of business enterprises; legal and administrative barriers to entrepreneurship; barriers to international trade and investment World Bank’s Doing Business - country ranking, Competitiveness Report , etc.
Education Equity and efficiency Graduation rates (university) Returns to tertiary education (wage premiums) Secondary education, school fees, scholarships Quality of education Success in getting a job ( tertiary) Success in getting to a uni ( secondary) Primary? PISA tests (15 yr-olds in match, reading, science, specific modules)
Structural reforms help sustainability, …
…improve budget balance, A permanent one-percentage point increase in employment can improve the budget balance by between 0.3 and 0.8 percentage points
Further reading http://www.oecd.org/eco/growth/going-for-growth-2013.htm Employment protection legislation indicators and their impact of employment http://www.oecd.org/employment/emp/oecdindicatorsofemploymentprotection.htm Product market regulation and impact on growth http://www.oecd.org/eco/reform/indicatorsofproductmarketregulationpmr.htm Measuring quality of education - PISA http://www.oecd.org/pisa/ Arnold, J., A. Bassanini and S. Scarpetta (2007), "Solow or Lucas?: Testing Growth Models Using Panel Data from OECD Countries", OECD Economics Department Working Papers, No. 592, OECD Publishing.doi: 10.1787/028487061153