Effects of Pro-Growth Policies on the Economic Stability of Firms, Workers and Households

OECD Economic Policy Paper, No. 12

31 Pages Posted: 25 Aug 2015

See all articles by Boris Cournede

Boris Cournede

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO)

Paula Garda

Organization for Economic Co-Operation and Development (OECD)

Peter Hoeller

Organization for Economic Co-Operation and Development (OECD)

Volker Ziemann

Organization for Economic Co-Operation and Development (OECD)

Date Written: April 1, 2015

Abstract

Economic policies shape how much people earn but also how stable their income and jobs are. The level of earnings and the degree of economic stability both matter for well-being. Micro-level data indicate that, across OECD countries, economic instability is much greater at the level of individuals than at the aggregate level. The present study investigates the effects on micro-level stability of policies that boost growth. Movement from less to more productive processes and firms is at the heart of economic growth, which suggests possible trade-offs between growth and micro-level stability. The analysis indeed finds policy changes that boost growth but increase micro-level instability: reducing the progressivity or size of social transfers (including unemployment benefits) as well as moving from very to moderately tight restrictions on the competition for goods and services and on the dismissal of regular workers. However, the analysis also uncovers that moving to highly competitive policies generally reduces micro-level instability.

Keywords: Stability, households, economic growth, reforms, microdata

JEL Classification: D12, D22, J08, O40

Suggested Citation

Cournede, Boris and Garda, Paula and Hoeller, Peter and Ziemann, Volker, Effects of Pro-Growth Policies on the Economic Stability of Firms, Workers and Households (April 1, 2015). OECD Economic Policy Paper, No. 12, Available at SSRN: https://ssrn.com/abstract=2649903 or http://dx.doi.org/10.2139/ssrn.2649903

Boris Cournede (Contact Author)

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) ( email )

2 rue Andre Pascal
Paris Cedex 16, MO 63108
France
+33145249037 (Phone)

HOME PAGE: http://www.oecd.org/eco

Paula Garda

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

Peter Hoeller

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

Volker Ziemann

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

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