LABOUR-MARKET PERFORMANCE IN THE OECD. AN ASSESSMENT OF RECENT EVIDENCE*

In this paper we assess the evolution of labour-market performance in the OECD over the last decade. We provide a survey of the literature dealing with labour-market performance in the OECD, finding that, while this literature tends to conclude that institutions are a key part of the story, its results appear far less robust and uniform than is commonly believed. We then assess the robustness of the claims made in the most recent OECD follow-up study (Brandt et al., 2005) within a very similar cross-country set-up, and highlight the im-pact of unobserved heterogeneity and outliers on the policy estimates. We find that in re-cent OECD cross-country data, changes in labour-market performance are consistently (and inversely) linked to its lagged level. Structural changes are also important: changes in the share of construction employees are very significant even in the presence of various kind of policy change indicators. As far as the latter are concerned, some consistent role seems to emerge only for active labour-market policies and (to a smaller extent) unem-ployment benefit reforms