This introductory chapter provides an overview of labor market reform. In times of economic crisis, policy makers undertake labor market reform in order to bring forth rapid economic turnarounds, yet reform is constrained by the existing institutional structure of the labor market that shapes the incentives and strategies of key actors in decision making and policy implementation. In a system where a majority of the workforce is covered by the institutionalized practices of employment protection, it is more likely that insiders, employers, and policy makers form a political coalition for selective labor market reform for outsiders with the persistence of protection for insiders. By contrast, where the less institutionalized practices of employment protection are only relevant for a small proportion of the workforce, while leaving a majority of the workforce unprotected, employers and policy makers are more likely to promote comprehensive labor market reform for all workers.
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