Making reform happen
OECD 29 November 2019
Challenges for making reform happen
● Fragmented political landscape resulting in minority
governments or coalition governments made up of
parties with different agendas.
– Low political returns on compromise.
– High political cost for breaking election campaign promises.
– High risk of reversal of reform in connection with change of
● Weak public finances.
– Need to finance reforms with tax increases/spending cuts.
Focus on reforms that increase efficiency
as well as equality
Examples of reform areas
● Access to high-quality education and health care
● Competitive markets to reduce monopoly rents
● Efficiency of tax collection
● Social insurance with workfare elements (requirement
to engage in active job search, participate in
education programmes etc.)
● Women’s labour market participation (individual
taxation, subsidized child care, access to elderly care)
Rise of populism and radical right have
contributed to political fragmentation
● Attract and mobilize voters with low trust in
– And perhaps more generally distrust in others.
● Claim that reform can be financed by reducing
immigration rather than increasing taxes/reducing
– Appealing narrative in countries facing fiscal constraints.
Evidence from Sweden
● Study by a group of researchers led by Torsten
Persson finds that the rise of the radical right (Sweden
Democrats, SD) partly can be explained by the
consequences of economic reforms for inequality.
● Have mobilized economic losers with low trust, partly
by coming from the same group.
– Share traits with their voters, unlike the other parties.
Increased inequality and job insecurity
linked to increased voter share of SD
Source: Dal Bó, E., F. Finan, O. Folke, T. Persson and J. Rickne, ”Economic losers
and political winners: Sweden's radical right”, 2018
Increase in inequality partly result of
Disposable income of insiders and outsiders (based on the size of labour income)
Source: Dal Bó, E., F. Finan, O. Folke, T. Persson and J. Rickne, ”Economic losers and
political winners: Sweden's radical right”, 2018
Embrace the engagement of young
● Risk that young generation sees future in bleak terms.
– Climate change
– Slow growth with poor job opportunities
– Poor access to housing
● Important with reforms directed to the needs of young
● Engagement by young activists effective in mobilizing
support for reforms.