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Evaluating the Impact of Labour Market Reforms in Greece during 2010-2018

Author

Listed:
  • Georgios Gatopoulos
  • Alexandros Louka
  • Ioannis Polycarpou
  • Nikolaos Vettas

Abstract

In view of long-standing weaknesses in GreeceÕs labour markets, several labour market reforms were implemented during the economic adjustment programmes with two objectives. Firstly, support the economyÕs adjustment through more flexible labour markets and secondly, enhance gains in cost competitiveness. In relation to their objectives, we find evidence that reforms largely fulfilled the second objective and partially the first, albeit left mostly unaddressed some of the long-standing weaknesses, such as low participation rate and high tax wedge. The analysis is backed by two distinct but complementary approaches. From a micro-founded analysis, while the 2014 reduction in social security contributions positively affected incentives for official sector labour participation, those appear to have decreased cumulatively during the overall programme period. From a top-down macroeconomic perspective, findings suggest that GreeceÕs 2012 labour market reforms had a positive impact on reducing Unit Labour Cost (ULC), increasing the use of flexible forms of employment, slowing down unemployment rate dynamics and slightly accelerating employment growth trends. At the same time, it appears that the 2012 reforms did not improve labour participation rates, while they increased average working hours and inequality.

Suggested Citation

  • Georgios Gatopoulos & Alexandros Louka & Ioannis Polycarpou & Nikolaos Vettas, 2021. "Evaluating the Impact of Labour Market Reforms in Greece during 2010-2018," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 156, Hellenic Observatory, LSE.
    • Handle: RePEc:hel:greese:156
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    References listed on IDEAS

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    More about this item

    Keywords

    Greek crisis; labour market reforms; impact assessment; participation tax rate; generalised synthetic control;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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