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

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  • Bergh, Andreas
  • Dackehag, Margareta
  • Rode, Martin

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.

Suggested Citation

  • Bergh, Andreas & Dackehag, Margareta & Rode, Martin, 2017. "Are OECD policy recommendations for public sector reform biased against welfare states? Evidence from a new database," European Journal of Political Economy, Elsevier, vol. 48(C), pages 3-15.
    • Handle: RePEc:eee:poleco:v:48:y:2017:i:c:p:3-15
    DOI: 10.1016/j.ejpoleco.2016.09.001
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    3. Ehrich, Malte & Munasib, Abdul & Roy, Devesh, 2018. "The Hartz reforms and the German labor force," European Journal of Political Economy, Elsevier, vol. 55(C), pages 284-300.

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    More about this item

    Keywords

    H53; P11; Welfare states; Reform; OECD; Economic institutions;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • P11 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Planning, Coordination, and Reform

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