New NBER paper finds reform success stronger in rich countries, challenging Olson and offering lessons for Germany
New NBER study finds richer countries achieve greater reform success than thought, challenging Olson’s theory and offering lessons for Germany’s debates.
A major new paper from Simeon Djankov, Edward Glaeser and Andrei Shleifer — published as an NBER working paper in 2026 — finds that richer states register higher reform success than poorer peers, overturning a long-standing view of inevitable policy stagnation in wealthy nations and putting “reform success” at the center of a renewed policy debate. The study analyzes nearly 3,600 reform attempts across 189 countries between 2005 and 2022 and compares the practical obstacles to change with classic theories from Mancur Olson and Ronald Coase. The analysis is illustrated by a recent German example: a new care home near Cologne whose construction and operating rules, the operator says, help drive monthly per-resident costs toward €9,000.
Study examines nearly 3,600 reforms across 189 countries
The authors compiled a large dataset of reform episodes — covering labor, tax, business registration and insolvency rules among other areas — to measure which proposals moved from design to implementation and which stalled. Their empirical approach combines assessments of a reform’s benefits and the feasibility of compensating those who would lose from change, together with a count of institutional “vetopoints” where blocks or approvals can be applied. By linking granular reform outcomes to country characteristics, the paper generates new evidence that relative wealth correlates with a higher likelihood that reforms will be completed and sustained.
Regulatory burdens inflate costs for German care homes
Local examples from Germany help explain why implementation matters as much as design. A care facility under construction near Cologne, run by the Diakonie in Michaelshoven, says compliance with detailed requirements — from mandated natural light levels and seismic measures to insulation, room sizes and staffing quotas — pushes costs up and contributes to monthly fees that can reach about €9,000 per bed. Those figures, the operator argues, show how cumulative regulation and procedural demands can translate into very visible financial outcomes for citizens, even when the underlying facility is not a luxury residence but a standard care home.
Why wealthier states post higher reform success rates
Djankov, Glaeser and Shleifer find that Olson’s hypothesis of institutional sclerosis — the claim that affluent societies become immobilized by entrenched interests — is incomplete when confronted with cross-country evidence from the 21st century. Instead, richer countries often have the fiscal capacity, institutional resources and administrative competence to compensate losers or to deploy implementation resources that lower resistance to change. The paper invokes Ronald Coase’s insight on compensation: where the benefits of reform outweigh the costs and losers can be credibly compensated, political barriers are more tractable in wealthier settings.
Vetopoints and the divide between technical and legal reforms
A key contribution of the study is formalizing the role of vetopoints, or decision nodes, that multiply the opportunities for opposition and delay; reforms that require fewer approvals or negotiations are more likely to be enacted. The authors show that “technological reforms” — such as digital company registration systems or electronic tax-filing platforms — typically involve fewer vetopoints and are implemented more readily than deeply distributive legal changes like labor laws or health-care restructuring. That distinction helps explain why some policy packages advance quickly even in complex polities, while others remain bogged down despite strong economic arguments.
Policy lessons for Germany’s federal reform process
For Germany, the research suggests practical adjustments rather than purely conceptual debates: policymakers should weigh both the expected gains from proposals and the realistic pathways for implementation, including how to limit or sequence vetopoints. The paper’s findings imply that prioritizing reforms with clear administrative implementation routes, allocating funds to compensate transitional losers where necessary, and scrutinizing which bodies truly must approve changes would increase the chances of success. At the same time, fiscal constraints can limit compensation strategies, and Germany’s federal structure — with Länder and the Bundesrat playing formal roles — adds identifiable veto opportunities that must be navigated.
The new evidence reframes long-standing assumptions about reform capacity by showing that wealth alone does not immutably doom change; rather, institutional design and the practical mechanics of implementation determine whether reform ideas become reality. Policymakers who aim to increase reform success in complex systems should combine persuasive policy design with realistic planning for approvals, compensation and administrative execution. The results from Djankov, Glaeser and Shleifer make clear that diagnosing obstacles to reform must be as tactical as it is analytical if democratic states are to translate policy ideas into effective outcomes.
