Have Macron’s Recent Labour Reforms Been as Impactful as Past German Reforms?

Abstract

Structural reforms can sometimes take many years for the effects to be visible in economic data: but one area where impacts can manifest more swiftly is the labour market. In particular, Germany’s experience in the mid-2000s is often cited as a clear example of how macroeconomic dynamics can shift relatively swiftly if the reforms are effective. More recently, France has seen a number of structural reforms, driven by President Macron’s desire to revitalize the French economy after his 2016 election. This paper examines the macroeconomic impact of recent French labour market reforms, comparing and contrasting this impact against the German experience in the 2000s. If idiosyncratic policy changes were a significant driver of labour market dynamics, then empirical outcomes should be different for those countries experiencing policy changes, relative to their peers. Using a variety of different statistical techniques, we find that – while there is clear evidence of the German labour market outperforming its peers when the Hartz reforms were enacted – there is no sign of the French labour market doing so under Macron’s presidency.