Labour Market Performance in the OECD. Some Recent Cross-Country Evidence

Purpose – The purpose of this paper is to assess the evolution of labour-market performance in the Organization for Economic Co-operation and Development (OECD) over the last decade, considering the robustness of the claims made in an important OECD follow-up study. Design/methodology/approach – The paper sets up an empirical framework calibrated on an important OECD follow-up study, and suggests some ways in which the impact of unobserved heterogeneity and outliers on policy estimates can be treated in a cross-section framework. The framework applies to the data for 30 OECD countries. Findings – The paper finds that changes in labour-market performance are inversely linked to lagged unemployment. Changes in the share of construction workers are also significant even in the presence of various kinds of policy change indicators. As far as the latter are concerned, the results highlight the role of unemployment benefits and, especially, active labour-market policies. Research limitations/implications – The kind of policy change indicators used do not allow the adoption of panel data techniques. Practical implications – An important policy role seems to emerge for unemployment benefit reforms and, even more so, active labour-market policies. The evidence also supports the contention that the construction sector is important for labour-market performance. Originality/value – The paper brings to the fore novel evidence about cross-country labour-market performance at a time when this issue is of high interest for citizens and policy-makers.