Modeling the effects of structural reforms and reform backlashes: The cases of pension and labor market reforms

Abstract

We build a simple model of reforms and reform backlashes into an overlapping generations model which is extended to the multi-country situation typical for Europe. As a particular feature of our model, we add the distinction between exogenous labor supply components – representing the key results of labor market and pension reform – and endogenous labor supply components – representing household reactions to those reforms and possible reform backlash.