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Macroeconomic Effects of Active Labour Market Programmes in a Union Wage-Setting Model

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Author Info
Calmfors, Lars
Lang, Harald
Abstract

The recent Western European policy debate on unemployment has emphasized the benefits of active labor market programs. The authors analyze the effects on wage pressure and equilibrium employment in a union wage-setting framework. Programs are wage-reducing to the extent that they help maintain effective labor-force participation but they may also weaken insider incentives for wage restraint as the disutility of layoffs becomes smaller. Targeting the long-term unemployed is crucial for the success of active labor market policy since the welfare effects on the laid-off then are more heavily discounted and employment opportunities are redistributed from insiders to outsiders. Copyright 1995 by Royal Economic Society.

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Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 105 (1995)
Issue (Month): 430 (May)
Pages: 601-19
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Handle: RePEc:ecj:econjl:v:105:y:1995:i:430:p:601-19

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  1. Lindblad, Hans & Sellin, Peter, 2003. "The Equilibrium Rate of Unemployment and the Real Exchange Rate: An Unobserved Components System Approach," Working Paper Series 152, Sveriges Riksbank (Central Bank of Sweden). [Downloadable!]
  2. Frijters, Paul & van der Klaauw, Bas, 2003. "Job Search with Nonparticipation," CEPR Discussion Papers 3922, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Armin Falk & David Huffman & Uwe Sunde, 2006. "Do I Have What It Takes? Equilibrium Search with Type Uncertainty and Non-Participation," IZA Discussion Papers 2531, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Van der Linden, Bruno & Dor, Eric, 2001. "Labor Market Policies and Equilibrium Employment : Theory and Application for Belgium," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2001005, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  5. Bruno, VAN DER LINDEN, 2003. "Unemployment insurance and training in an equilibrium matching model with heterogeneous agents," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2003001, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
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  6. Norbert Berthold & Rainer Fehn, 2003. "Unemployment in Germany: Reasons and Remedies," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  7. Johansson, Åsa, 2002. "The Interaction Between Labor Market Policy and Monetary Policy: An Analysis of Time Inconsistency Problems," Seminar Papers 708, Stockholm University, Institute for International Economic Studies. [Downloadable!]
  8. Calmfors, Lars & Forslund, Anders & Hemström, Maria, 2002. "Does Active Labour Market Policy Work? Lessons from the Swedish Experiences," Seminar Papers 700, Stockholm University, Institute for International Economic Studies. [Downloadable!]
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  9. Van der Linden, Bruno & Dor, Eric, 1998. "The net effect of unemployment benefits, sanctions and training on aggregate unemployment outflows," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2000020, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 07 Sep 2000. [Downloadable!]
  10. Johansson, Kerstin, 2006. "Do labor market flows affect labor-force participation?," Working Paper Series 2006:17, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
  11. Carlo Altavilla & Floro Ernesto Caroleo, 2006. "Evaluating the Dynamic Effects of Active Labour Policies in Italy," Discussion Papers 8_2006, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy. [Downloadable!]
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  12. Skedinger, Per & Lundin, Martin, 2000. "Decentralisation of Active Labour Market Policy: The Case of Swedish Local Employment Service Committees," Working Paper Series 537, Research Institute of Industrial Economics. [Downloadable!]
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  13. Carlo Altavilla, Floro Ernesto Caroleo, 2004. "Evaluating Asimmetries in Active Labour Policies: The Case of Italy," CELPE Discussion Papers 84, CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy. [Downloadable!]
  14. Kåre Johansen, 2002. "Regional Wage Curves Empirical Evidence from Norway," Working Paper Series 0302, Department of Economics, Norwegian University of Science and Technology. [Downloadable!]
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