On structural reforms and job creation

In my recent post Getting beyond Europe’s spend more/spend less debate, I focused on the pros and cons of structural reforms including labour market reforms. This recent article in the Economist, drawing on recent studies from the IMF and OECD (linked at the end of the article), points out that the economic impact of structural reforms depends very much on prevailing macroeconomic conditions and on the type of reforms enacted. During a period of weak demand, liberalising product markets (i.e., ending cartels) is much better at stimulating employment than liberalising labour markets. This is certainly relevant here in Ireland, where we are beset by anti-competitive cartels in the pharmacy and hospital consultant sectors, among others.