Are OECD policy recommendations for public sector reform biased against welfare states? Evidence from a new database

Research output: Contribution to journalArticle

Abstract

Policy advice by the OECD has long been at the heart of academic debates on welfare state reform, with frequent claims questioning the ideological orientation of recommendations. This paper constructs an indicator of perceived reform need for 24 countries, quantifying the policy advice contained in the OECD Economic Surveys around 1985, 1995, and 2005. These recommendations describe a policy consensus that is based on competition, work incentives, monetary reform, fiscal discipline, and labor market reform. Empirically, perceived need for reform is well explained by preceding levels of economic freedom. In particular, countries with more government intervention, lower property rights protection, and more regulation are perceived to have a bigger reform need. In turn, perceived reform need has no explanatory power for subsequent changes in social expenditure and welfare state entitlements. Only in countries with right wing governments, perceived reform need might be followed by marginal reductions in welfare state entitlements, but definitely not in social expenditure.

Details

Authors
Organisations
External organisations
  • Research Institute of Industrial Economics
  • University of Navarra
Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Economics

Keywords

  • welfare states, reform, OECD, economic institutions
Original languageEnglish
Pages (from-to)3-15
JournalEuropean Journal of Political Economy
Volume48
Early online date2016 Sep 20
StatePublished - 2017 Jun
Publication categoryResearch
Peer-reviewedYes