and other unpaid caregivers and workers in the informal sector. The latter—the exclusion of informal workers from the definition of the labor force—turns out to be important for the interpretation of the econometric evidence discussed in the results section below. Labor force participation rate series for countries not available from the World Bank WDI were accessed from the IMF IFS as the labor force as a percentage of the population aged 15 and older. The **female labor force participation rate (FemaleLFPRate)** , accessed from the World Bank WDI, is the female labor force as a percentage of the female working age population.

Additional control variables are included. **Real GDP (rGDP)** is measured in thousands of constant 2005 international dollars and is accessed from the Penn World Tables version 7.0 (Heston, Summers and Aten 2011) as PPP converted GDP per capital (chain series) constant 2005 prices multiplied by the population. The **working age population (WorkingAgePop)** measures the number of people who could potentially be economically active as the total population between the ages 15 to 64, accessed from the World Bank WDI.

Four instrumental variables were considered to instrument POST. The **external debt-to-GDP ratio (Debt)** is total external debt (debt owed to nonresidents repayable in foreign currency, goods, or services)<sup>5</sup> from the World Bank WDI as a share of GDP. The **external debt-to-GDP ratio interacted with the change in world interest rates (proxied by the U.S. Treasury Bill rate) (DebtTBill)** , is the same as above only interacted with the one-year change in the market yield on U.S. Treasury securities at 10-year constant maturity, available from the United States Federal Reserve. **Terms of trade (TofT)** is the net barter terms of trade index from the World Bank WDI, calculated as the percentage ratio of the export unit value indexes to the import unit value indexes, measured relative to the base year 2000. The **five-year change in democracy score (Dem5)** is calculated as the five-year change in Polity IV’s governing authority index (Gurr, Marshall and Jaggers 2012). Index scores range from -10 (most autocratic) to 10 (most democratic). See Appendix Table 2 for a complete list of the variables, their definitions and their sources.

Table 1 reports summary statistics for each of the variables of interest.

# **6. Results**

# **6.1 Time plots of labor-market outcomes**

As previously mentioned, in equation (1) the coefficient of each _PreDummy_ ( _j_ ) and _PostDummy_ ( _j_ ) represents the cross-country average of the level of the labor-market outcome variable in its corresponding time period relative to the level the year of reform where time is equal to -1 the year prior to reform, 0 the year of reform, 1 the year after reform, etc. In Figure 2, we specifically plot the crosscountry average relative unemployment rate in each year. There are no controls in the estimation of (1) other than country fixed effects in Panel A, while additional controls in Panel B include real GDP, the labor force participation rate and the working age population. Both panels clearly show that, while on average unemployment fluctuates both before and after reforms, the post-reform average level of the

> 5 Total external debt is debt owed to nonresidents repayable in foreign currency, goods, or services. Total external debt is the sum of public, publicly guaranteed and private nonguaranteed long-term debt, use of IMF credit and short-term debt. Shortterm debt includes all debt having an original maturity of one year or less and interest in arrears on long-term debt. Data are in current U.S. dollars.

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