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Does Active Labour-Market Policy Increase Employment? Theoretical Considerations and Some Empirical Evidence from Sweden

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Author Info
Calmfors, Lars
Skedinger, Per

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Abstract

Active labour-market policy affects employment through several mechanisms that work in different directions. This paper develops a theoretical framework for structuring the various employment effects of different types of programs and the effects of targeting specific groups. The empirical analysis is based on data for Swedish regions. It addresses the identification problem that arises because the size of labor-market programs is likely to be endogenously determined and affected by unemployment. Most regressions indicate substantial crowding out of regular employment from job-creation measures, whereas the results with respect to labor-market training and targeting are mixed. Training appears, though, to have more favorable effects on regular employment than job-creation schemes. The results are sensitive to the exact specification and the methods of estimation. On the whole the evidence for large favorable employment effects of active labor-market programs appears weak. This warns against putting too much faith in them as a solution to the European unemployment problem. Copyright 1995 by Oxford University Press.

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Publisher Info
Article provided by Oxford University Press in its journal Oxford Review of Economic Policy.

Volume (Year): 11 (1995)
Issue (Month): 1 (Spring)
Pages: 91-109
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Handle: RePEc:oup:oxford:v:11:y:1995:i:1:p:91-109

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  1. Fitzenberger, Bernd & Speckesser, Stefan, 2000. "Zur wissenschaftlichen Evaluation der aktiven Arbeitsmarktpolitik in Deutschland : ein Überblick," ZEW Discussion Papers 00-06, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  2. Fukushima, Yoshihiko, 1998. "Active Labour Market Programmes and Unemployment in a Dual Labour Market," Research Papers in Economics 1998:2, Stockholm University, Department of Economics. [Downloadable!]
  3. Sergio Destefanis & Raquel Fonseca, 2006. "Labour-Market Reforms and the Beveridge Curve. Some Macro Evidence for Italy," CSEF Working Papers 168, Centre for Studies in Economics and Finance (CSEF), University of Salerno, Italy. [Downloadable!]
  4. Hujer, Reinhard & Zeiss, Christopher, 2003. "Macroeconomic Impacts of ALMP on the Matching Process in West Germany," IZA Discussion Papers 915, Institute for the Study of Labor (IZA). [Downloadable!]
  5. Vollkommer, Dieter, 2002. "Regionalization of active labour market policies - an aggregat impact analysis," ERSA conference papers ersa02p255, European Regional Science Association. [Downloadable!]
  6. Fertig, Michael, 2004. "The Effectiveness of Qualification Measures for Employed Workers - An Evaluation Study for Saxony," IZA Discussion Papers 1205, Institute for the Study of Labor (IZA). [Downloadable!]
  7. 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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  8. Reinhard Hujer & Christopher Zeiss, 2006. "Macroeconomic Effects of Short-Term Training Measures on the Matching Process in Western Germany," IZA Discussion Papers 2489, Institute for the Study of Labor (IZA). [Downloadable!]
  9. Hujer, Reinhard & Zeiss, Christopher, 2005. "Vermittlungsgutscheine: Zwischenergebnisse der Begleitforschung 2004 : Teil 4: Makroökonomische Wirkungsanalyse," IAB-Forschungsbericht 200504, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]. [Downloadable!]
  10. Marcello M. Estevão, 2003. "Do Active Labor Market Policies Increase Employment?," IMF Working Papers 03/234, International Monetary Fund. [Downloadable!]
  11. Hujer, Reinhard & Caliendo, Marco & Zeiss, Christopher & Blien, Uwe, 2002. "Macroeconometric evaluation of active labour market policies in Germany - a dynamic panel approach using regional data," ERSA conference papers ersa02p225, European Regional Science Association. [Downloadable!]
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  12. Reinhard Hujer & Marco Caliendo, 2003. "Lohnsubventionen in Deutschland : wie sieht eine optimale Evaluierungsstrategie aus?," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(1), pages 109-123. [Downloadable!] (restricted)
  13. Johansson, Kerstin, 2006. "Do labor market flows affect labor-force participation?," Working Paper Series 2006:17, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
  14. Sergio Destefanis, Raquel Fonseca, 2005. "Matching Efficiency and Labour Market Reform in Italy. A Macroeconometric Assessment," CELPE Discussion Papers 93, CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy. [Downloadable!]
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  15. J Richardson, 1997. "Wage Subsidies for the Long Term Unemployed: A Search Theoretic Analysis," CEP Discussion Papers 0347, Centre for Economic Performance, LSE. [Downloadable!]
  16. 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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  17. 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!]
    Other versions:
  18. 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!]
  19. Hagen, Tobias, 2003. "Three Approaches to the Evaluation of Active Labour Market Policy in East Germany Using Regional Data," ZEW Discussion Papers 03-27, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  20. Michael Fertig, 2004. "The Effectiveness of Qualification Measures for Employed Workers – An Evaluation Study for Saxony," RWI Discussion Papers 0010, Rheinisch-Westfälisches Institut für Wirtschaftsforschung. [Downloadable!]
  21. Dahlberg, Matz & Forslund, Anders, 1999. "Direct displacement effects of labour market programmes: the case of Sweden," Working Paper Series 1999:7, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
    Other versions:
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