The strategy of structural reforms in practice is the object of this final chapter. As an example, the history of the first centre-left government in Italy in the 1960s is considered, with reforms concerning the nationalization of the electricity sector, the reform of the secondary schools, universal wealth assistance, pension reform, the workers statute expanding workers rights, etc. A worldwide stage of retreat followed the fall of the Bretton Woods system and the affirmation of neoliberal governments in key countries (Thatcher in the UK, Reagan in the USA). The negative consequences and the shaky theoretical foundations of neoliberalism are illustrated. A renewed strategy of structural reforms is proposed, both in an international dimension and with specific reference to the case of Italy.

A distinction between left and right policies is proposed, based on the opposition between the aim of a reduction of power inequalities in society and their acceptance as unavoidable if not useful. The objective of absolute equality is criticized. The complex nature of the notion of equality is illustrated recalling Sens notion of capabilities. Progress, interpreted as a reduction in power inequalities within society, is possible, but not a necessary historical outcome. It requires active policies, organized in a strategy of structural reform.

The last twenty years in Israel have given rise to dramatic economic developments with special focus on financial markets. Such developments have become feasible due to changing macro-economy paradigms following the 1983 crisis in the Israeli banking system. A prominent paradigm shift evolved around the diminishing role of the government in financial markets. The period we survey in this chapter is characterized by continuing this trajectory. In addition, the surveyed period has promoted structural reforms attempting to: (i) diminish the overwhelming banks’ controlling power, (ii) form an off-bank credit market, (iii) break the centralized controlling structure in the economy, and (iv) mitigate the conflict of interests between major and minor holders in public companies. Moreover, the local economy has widely been opened up to the global environment. Major steps include the adoption of international norms in financial reporting and corporate governance, the full liberalization in the foreign currency market, and the adoption of an equal taxation among financial investments. We examine all these structural reforms and their outcomes on the Israeli financial markets and present the upcoming reforms in the retail credit market.

Over recent years, a consensus has emerged that 'policy failures that allowed imbalances to get so large' were probably the main root cause of the Euro area crisis.Reflecting this, the new Euro area governance arrangements include a Macroeconomic Imbalances Procedure (MIP) that seeks to identify and take corrective action against emerging imbalances.This chapter uses a Bayesian structural VAR model to assess the feasibility of managing macroeconomic imbalances in the Euro area using four macroeconomic policy tools:fiscal policy, macroprudential policy, product market structural reforms and labour market reforms.Consistent with the emerging literature, it finds that managing macroeconomic imbalances is likely to be difficult.However, it raises the tantalising prospect that a combination of eliminating structural rigidities before macroeconomic imbalances arise plus using macroprudential policy to manage emerging macroeconomic imbalances could be effective.

This chapter provides an in-depth examination of labour market transitions in the EU over the period 2004–2016, drawing on EU–Labour Force Survey (EU-LFS) data. Building on the earlier work of Ward-Warmedinger and Macchiarelli (2014), our analysis offers a detailed insight on how well European economies have recovered from the crisis and whether, and to what extent, their labour markets have returned to their precrisis path. In particular, we analyse labour market transitions across the three key labour market statuses of employment, unemployment and inactivity, providing aggregate break-downs by country, age groups, gender and individual’s level of education based on the EU-LFS. We subsequently use country-specific measures of transition rates and a synthetic index of mobility in order to draw comparisons across countries and over time, as well as examine how country-specific patterns relate to key institutional characteristics, both microeconomic (e.g., employment protection legislation) and macropolitical (e.g., welfare regimes). This offers a granular overview of labour market trends by country and for the EU as a whole, allowing us to draw conclusions about the functioning of labour markets in Europe with regard to their flexibility (speed/extent of transitions and extent of mobility) and how this evolved over time since the crisis.

It has long been argued that structural reforms constitute a remedy for getting countries out of the low-growth environment that Europe has experienced in the last decade. Many recent studies show long-term benefits of such reforms in cross-country settings, but ignore the heterogeneity across different country experiences. To address this gap in the context of the European Union, we focus on the largest early reforms that its four members (Denmark, France, Greece and Portugal) adopted in financial and labour markets. By using a Synthetic Control Method, we find that many of these early reform episodes do not seem to have been as fruitful as their advocates claimed at the time. Our results indicate a rather mixed relationship between reforms and several macro measures, including economic growth and inequality. Reforms, especially when introduced all at once as a big-bang, do not seem to always produce the intended results.

Structural reforms are often presented as a growth panacea. We review this concept through two separate analyses. First, we quantify the impact of wide-reaching reform packages implemented in twenty-three countries worldwide. Second, we look at the role that reforms had in contributing to spark 135 growth accelerations, i.e., positive up-breaks in growth patterns. All in all, our results point to the fact that deep economic reforms can have an important impact on a country’s growth rate but, often, they fail to deliver their benefits and, in some instances, they can even be detrimental. In achieving economic growth, there are no silver bullets. Rather, economic reforms should be framed as an opportunity that, if appropriately tailored to country-specific needs and well implemented, could yield important benefits.

This chapter investigates structural labour market reforms in Hungary from 1986 to 2016, a period encompassing the fall of communism, EU accession in 2004 and the global financial crisis. Using the narrative approach, we identify three main labour reforms: in 1992 and 2002 aimed at increasing and in 2012 aimed at decreasing employment protection. We study their effects using a unique data set of about 6 million Hungarian wage earners. We find that (1) the skill premium almost doubled from 6.4 per cent in 1986 to 12.3 per cent in 2016, but peaking in 2004; (2) the gender wage gap decreased to a third with the difference in log wages declining from 0.31 in 1986 to 0.13 in 2004, with no changes thereafter; and (3) gender discrimination practically halved as the unexplained component from the Oaxaca decomposition of the difference in log wages decreased from 0.27 in 1989 to 0.15 after 2004.

One reason the effects of individual structural reforms are notoriously difficult to capture is the possibility that they depend upon other reforms and institutions. This chapter studies whether and to what extent reforms in labour market regulation are complementary to tax changes in increasing employment in the European Union (EU). We use a dynamic model of employment growth to estimate and try to disentangle the individual effects from the combined effects of these reforms using a yearly panel of EU countries from 1990 to 2015. Our estimates suggest that reform complementarity between labour market policy and taxation, through substantial and significant interaction effects, seems key to foster employment growth and enhance the effectiveness of both reforms.