What triggers reforms in OECD countries? Improved reform measurement and evidence from the healthcare sector

The main contribution of this paper is the development of a novel and versatile methodology to identify economic reforms. The methodology is a combination of the Bai & Perron structural break filter, and validation of the structural breaks identified using de jure evidence of reforms. The procedure is sequential and it ensures that the identified reforms originate from policy changes and that these have a statistically significant impact on economic data. This paper also adds new empirical evidence to the political economy literature of determinants of economic reforms. Applying the methodology to the healthcare sector allows us to identify 22 de facto healthcare financing privatisations in a sample of 23 OECD countries. It is analysed which factors trigger or hinder healthcare financing privatisations. Robust evidence is found in favour of the ‘crises induce reform hypothesis’. Contrary to theory and conventional wisdom, robust evidence is found that political factors do not have an impact.