The evidence on the effect of structural reforms on labor force participation rates (overall and female) is somewhat inconclusive even though we find that there is a positive time trend and positive effect of real GDP. Finally, there is some indication that structural reforms may have increased female employment. Because we controlled for the time trend and real GDP, our results show the impact of structural reforms on labor-market outcomes beyond what happens through the impact on growth. Redistributive effects in favor of workers, along the lines of the Stolper-Samuelson effect, may be at work.

While the literature that finds evidence of a positive effect of structural reforms and greater openness on growth is well established, to our knowledge, there are only two major cross-country empirical studies that look at the impact of trade policy on unemployment rates.<sup>2</sup> One is the paper by Dutt, Mitra and Ranjan (2009) and the other is by Felbermayr, Prat and Schmerer (2011a).<sup>3</sup> Both papers show that countries that have less protectionist (more open) trade policies have lower unemployment rates. This is true both without any controls and after controlling for other policies and institutions that have a more direct impact on labor markets. Dutt, Mitra and Ranjan (2009) also find that the short-run impact of trade reforms is an increase in the unemployment rate followed by a reduction in the long run to a lower steady-state unemployment rate. In addition, there are papers studying the role of other kinds of policies and institutions, namely labor-market policies and institutions, in the determination of unemployment rates. Scarpetta (1996) uses a panel of Organisation for Economic Co-operation and Development (OECD) countries to study the role of labor-market policies and institutions on unemployment rates and the speed of adjustment of the labor market. Another paper looking at the role of labor-market institutions on unemployment rates in the OECD is Nickell, Nunziata and Ochel (2005). Blanchard and Wolfers (2000) study the interaction between macroeconomic shocks (such as shocks to total factor productivity and the interest rate) and labor-market institutions (such as the degree of employment protection) in the determination of unemployment rates in Europe.

Our paper differs from Dutt, Mitra and Ranjan (2009) and Felbermayr, Prat and Schmerer (2011a) along several dimensions. The first major and probably the main difference is that while these papers focus on the unemployment rate, our paper looks at a multitude of labor-market outcomes. Secondly, unlike the previous studies, we include sample periods in our panel, such that for each country we cover a maximum of 10 years before reform and a maximum of 10 years after reforms. While this approach can limit the number of observations, it gives us greater confidence in our results for the countries we are able to study. Thirdly, unlike the two papers mentioned above, our focus is not limited to trade policies. We look at the impact of structural reforms in general (of which trade reform is just one component) on labor-market outcomes. Finally, we are able to use credible instrumental variables for our structural reform variable. It is well known that structural reforms are endogenous to macroeconomic policies and conditions and therefore to unemployment rates and other labor-market outcomes. We draw on the political-economy literature to come up with a fairly extensive set of

> 2 Included in the literature that finds evidence of structural reforms leading to growth is the seminal work of Sachs and Warner (1995). While the paper’s measurement and estimation framework came under criticism, Wacziarg and Welch (2008) show that liberalization has, on average, robust positive effects on growth. See Baldwin (2003) for a survey of the literature. 3 See also Hasan et al. (2012) for an intra-country study on cross-state and cross-industry variations in unemployment in the context of trade reforms.

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