This paper argues that an important group of labor market policies are complementary in the sense that the effect of each policy is greater when implemented in conjunction with the other policies than in isolation. This may explain why the diverse, piecemeal labor market reforms in many European countries in recent years have had so little success in reducing unemployment. What is required instead is deeper labor market reforms across a broader range of complementary policies and institutions. To be politically feasible, these reforms must be combined with measures to address distributional issues.

While economists continue to debate whether particular economic policies, such as those referred to in Willliamson’s (1993) “Washington Consensus,” can spur growth in developing countries, this paper demonstrates that it is combinations of policies that are more critical for growth. Policy complementarity refers to the mutually reinforcing benefits of policies that create an environment that is conducive to investment and growth. Quantitative measures of policy complementarity are developed, and the study shows empirically, through both an outcomes-based probability framework and a standard regression analysis, that these complementarities are significant and robust in explaining growth outcomes over the period 1985–95.

This edition of OECD's annual report on employment prospects in the OECD area includes a comprehensive re-examination of the OECD Jobs Strategy.

This important collection presents an authoritative selection of papers on "Institutional Conflicts and Complementarities" This publication is intent on building bridges between economics and the other social sciences. The focus is on the interaction between monetary policy and wage bargaining institutions in European Monetary Union (EMU). Institutional Conflicts and Complementarities is written by acknowledged experts in their field. The outcome is a broad analysis of the interactions of labour market actors and central banks. The volume addresses the recent changes in EMU. An important theoretical, empirical, and policy-relevant conclusion that emerges from Institutional Conflicts and Complementarities is that even perfectly credible monetary conservatism has long-term real effects, even in equilibrium models with fully rational expectations.

Applying the new economics of organisation and relational theories of the firm to the problem of understanding cross-national variation in the political economy, this volume elaborates a new understanding of the institutional differences that characterise the 'varieties of capitalism' worldwide.