IDEAS home Printed from https://ideas.repec.org/a/vrs/izajdm/v12y2021i1p27n9.html
   My bibliography  Save this article

Better together: Active and passive labor market policies in developed and developing economies

Author

Listed:
  • Pignatti Clemente

    (International Labour Organization, Route des Morillons 4, 1211Genève)

  • Van Belle Eva

    (Swiss Forum for Migration and Population Studies (SFM), Université de Neuchâtel, 2000Neuchâtel, Switzerland)

Abstract

We investigate the macroeconomic impact of public expenditure in active labor market policies (ALMPs) and passive labor market policies (PLMPs) on main employment indicators (i.e., unemployment, employment, and labor force participation) for a large and novel panel database of 121 countries (36 developed, 64 emerging and 21 developing economies). Compared to previous studies, we include for the first time evidence from developing and emerging economies and explicitly examine the possible presence of complementarities between active and passive policies. We find that the interaction between interventions is crucial, as the effect of spending in either of the two policies is more favorable the more is spent on the other. Even the detrimental labor market effects of passive policies disappear on the condition that sufficient amounts are spent on active interventions. This complementarity seems even more important for emerging and developing economies.

Suggested Citation

  • Pignatti Clemente & Van Belle Eva, 2021. "Better together: Active and passive labor market policies in developed and developing economies," IZA Journal of Development and Migration, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 12(1), pages 1-27, January.
    • Handle: RePEc:vrs:izajdm:v:12:y:2021:i:1:p:27:n:9
    DOI: 10.2478/izajodm-2021-0009
    as

    Download full text from publisher

    File URL: https://doi.org/10.2478/izajodm-2021-0009
    Download Restriction: no
    File URL: https://libkey.io/10.2478/izajodm-2021-0009?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Murtin, Fabrice & Robin, Jean-Marc, 2018. "Labor market reforms and unemployment dynamics," Labour Economics, Elsevier, vol. 50(C), pages 3-19.
    2. Seamus McGuinness & Philip J. O’Connell & Elish Kelly, 2019. "Carrots, No Stick, No Driver: The Employment Impact of Job Search Assistance in a Regime with Minimal Monitoring and Sanctions," Journal of Labor Research, Springer, vol. 40(2), pages 151-180, June.
    3. Claudia Martínez A. & Esteban Puentes & Jaime Ruiz-Tagle, 2015. "Do Micro-Entrepreneurship Programs Increase Wage-Work? Evidence from Chile," Documentos de Trabajo 461, Instituto de Economia. Pontificia Universidad Católica de Chile..
    4. Karen Macours & Norbert Schady & Renos Vakis, 2012. "Cash Transfers, Behavioral Changes, and Cognitive Development in Early Childhood: Evidence from a Randomized Experiment," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 247-273, April.
    5. Bart Cockx & Eva Van Belle, 2019. "Waiting longer before claiming, and activating youth: no point?," International Journal of Manpower, Emerald Group Publishing Limited, vol. 40(4), pages 658-687, January.
    6. Simen Markussen & Knut Røed, 2016. "Leaving Poverty Behind? The Effects of Generous Income Support Paired with Activation," American Economic Journal: Economic Policy, American Economic Association, vol. 8(1), pages 180-211, February.
    7. Verónica Escudero, 2018. "Are active labour market policies effective in activating and integrating low-skilled individuals? An international comparison," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-26, December.
    8. Escudero, Verónica & López Mourelo, Elva & Pignatti, Clemente, 2020. "Joint provision of income and employment support: Evidence from a crisis response in Uruguay," World Development, Elsevier, vol. 134(C).
    9. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    10. Andrea Bassanini & Romain Duval, 2006. "Employment Patterns in OECD Countries: Reassessing the Role of Policies and Institutions," OECD Economics Department Working Papers 486, OECD Publishing.
    11. repec:idb:brikps:publication-detail,7101.html?id=32886 is not listed on IDEAS
    12. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages 1-33, March.
    13. Karen Macours & Norbert Schady & Renos Vakis, 2012. "Cash Transfers, Behavioral Changes, and Cognitive Development in Early Childhood: Evidence from a Randomized Experiment," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 247-273, April.
    14. Eva Van Belle & Ralf Caers & Marijke De Couck & Valentina Di Stasio & Stijn Baert, 2019. "The Signal of Applying for a Job Under a Vacancy Referral Scheme," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 58(2), pages 251-274, April.
    15. Jonneke Bolhaar & Nadine Ketel & Bas van der Klaauw, 2019. "Job Search Periods for Welfare Applicants: Evidence from a Randomized Experiment," American Economic Journal: Applied Economics, American Economic Association, vol. 11(1), pages 92-125, January.
    16. Tamayo, Jorge Andrés & Núñez, Jairo & Medina, Carlos, 2013. "The Unemployment Subsidy Program in Colombia: An Assessment," IDB Publications (Working Papers) 4622, Inter-American Development Bank.
    17. Emanuela Galasso & Martin Ravallion & Agustin Salvia, 2004. "Assisting the Transition from Workfare to Work: A Randomized Experiment," ILR Review, Cornell University, ILR School, vol. 58(1), pages 128-142, October.
    18. Peter Gal & Adam Theising, 2015. "The macroeconomic impact of structural policies on labour market outcomes in OECD countries: A reassessment," OECD Economics Department Working Papers 1271, OECD Publishing.
    19. Francesco Pastore & Claudio Quintano & Antonella Rocca, 2020. "Stuck at a crossroads? The duration of the Italian school-to-work transition," International Journal of Manpower, Emerald Group Publishing Limited, vol. 42(3), pages 442-469, September.
    20. Kluve, Jochen, 2010. "The effectiveness of European active labor market programs," Labour Economics, Elsevier, vol. 17(6), pages 904-918, December.
    21. Fabrice Murtin & Alain Serres, 2014. "How Do Policies Affect the Exit Rate out of Unemployment? Disentangling Job Creation from Labour Market Frictions," LABOUR, CEIS, vol. 28(2), pages 190-208, June.
    22. Armando Barrientos & David Hulme, 2009. "Social Protection for the Poor and Poorest in Developing Countries: Reflections on a Quiet Revolution," Oxford Development Studies, Taylor & Francis Journals, vol. 37(4), pages 439-456.
    23. Orley Ashenfelter & Cecilia Rouse, 1998. "Income, Schooling, and Ability: Evidence from a New Sample of Identical Twins," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(1), pages 253-284.
    24. Reinhard Hujer & Paulo J.M. Rodrigues & Katja Wolf, 2009. "Estimating the macroeconomic effects of active labour market policies using spatial econometric methods," International Journal of Manpower, Emerald Group Publishing Limited, vol. 30(7), pages 648-671, November.
    25. Graversen, Brian Krogh & van Ours, Jan C., 2008. "How to help unemployed find jobs quickly: Experimental evidence from a mandatory activation program," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 2020-2035, October.
    26. David H. Greenberg & Charles Michalopoulos & Philip K. Robins, 2003. "A Meta-Analysis of Government-Sponsored Training Programs," ILR Review, Cornell University, ILR School, vol. 57(1), pages 31-53, October.
    27. John Martin, 2015. "Activation and active labour market policies in OECD countries: stylised facts and evidence on their effectiveness," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-29, December.
    28. Andrea Bassanini & Romain Duval, 2009. "Unemployment, institutions, and reform complementarities: re-assessing the aggregate evidence for OECD countries," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 25(1), pages 40-59, Spring.
    29. Boone, J. & van Ours, J.C., 2004. "Effective Labor Market Policies," Discussion Paper 2004-87, Tilburg University, Center for Economic Research.
    30. Bruno Crépon & Marc Ferracci & Denis Fougere, 2012. "Training the Unemployed in France: How Does it Affect Unemployment Duration and Recurrence?," Annals of Economics and Statistics, GENES, issue 107-108, pages 175-199.
    31. repec:hal:spmain:info:hdl:2441/1avjr94u1u9dkqrhs6u825vpp4 is not listed on IDEAS
    32. Boone, Jan & van Ours, Jan C., 2004. "Effective Active Labor Market Policies," IZA Discussion Papers 1335, Institute of Labor Economics (IZA).
    33. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097, Elsevier.
    34. Almeida, Rita K. & Galasso, Emanuela, 2010. "Jump-starting Self-employment? Evidence for Welfare Participants in Argentina," World Development, Elsevier, vol. 38(5), pages 742-755, May.
    35. Lusine Lusinyan & Leo Bonato, 2007. "Work Absence in Europe," IMF Staff Papers, Palgrave Macmillan, vol. 54(3), pages 475-538, July.
    36. repec:hal:spmain:info:hdl:2441/6krnfp4alc80oa55v0i3jrhl18 is not listed on IDEAS
    37. Armando Barrientos, 2010. "Protecting Capability, Eradicating Extreme Poverty: Chile Solidario and the Future of Social Protection," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 11(4), pages 579-597.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Francesco Filippucci, 2022. "What Do NEETs Need? The Effect of Combining Activation Policies and Cash Transfers," Working Papers halshs-03524083, HAL.
    2. Sergio Destefanis & Matteo Fragetta & Nazzareno Ruggiero, 2023. "Active and passive labour-market policies: the outlook from the Beveridge curve," Applied Economics, Taylor & Francis Journals, vol. 55(55), pages 6538-6550, November.
    3. Theodoropoulos, Nikolaos & Voucharas, Georgios, 2023. "Firm Closures and Labor Market Policies in Europe: Evidence from Retrospective Longitudinal Data," GLO Discussion Paper Series 1288, Global Labor Organization (GLO).
    4. Asya Bellia, 2021. "How do different policy combinations affect the labour market attachment of disabled individuals? A review of the literatur," Discussion Papers 2021/283, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    5. Antonia Asenjo & Verónica Escudero & Hannah Liepmann, 2024. "Why Should we Integrate Income and Employment Support? A Conceptual and Empirical Investigation," Journal of Development Studies, Taylor & Francis Journals, vol. 60(1), pages 1-29, January.
    6. Lucia Svabova & Katarina Kramarova, 2022. "Allowance for School Graduate Practice Performance in Slovakia: Impact Evaluation of the Intervention," Mathematics, MDPI, vol. 10(9), pages 1-27, April.
    7. Eleftherios Giovanis & Oznur Ozdamar, 2022. "Accommodating Employees with Impairments and Health Problems: The Role of Flexible Employment Schemes in Europe," Merits, MDPI, vol. 3(1), pages 1-26, December.
    8. Francesco Filippucci, 2022. "What Do NEETs Need? The Effect of Combining Activation Policies and Cash Transfers," PSE Working Papers halshs-03524083, HAL.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marwa Sahnoun & Chokri Abdennadher, 2018. "The assessment of active labor market policies: evidence from OECD countries," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(2), pages 257-283, August.
    2. Verónica Escudero, 2018. "Are active labour market policies effective in activating and integrating low-skilled individuals? An international comparison," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-26, December.
    3. Antonia Asenjo & Verónica Escudero & Hannah Liepmann, 2024. "Why Should we Integrate Income and Employment Support? A Conceptual and Empirical Investigation," Journal of Development Studies, Taylor & Francis Journals, vol. 60(1), pages 1-29, January.
    4. Theodoropoulos, Nikolaos & Voucharas, Georgios, 2023. "Firm Closures and Labor Market Policies in Europe: Evidence from Retrospective Longitudinal Data," GLO Discussion Paper Series 1288, Global Labor Organization (GLO).
    5. Alessio Brown & Johannes Koettl, 2015. "Active labor market programs - employment gain or fiscal drain?," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-36, December.
    6. Céline Piton, 2022. "The labour market performance of vulnerable groups: towards a better understanding of the main driving forces," ULB Institutional Repository 2013/352519, ULB -- Universite Libre de Bruxelles.
    7. repec:ilo:ilowps:487304 is not listed on IDEAS
    8. Andrea Bassanini & Romain Duval, 2006. "The Determinants of Unemployment across OECD Countries," Post-Print halshs-00120584, HAL.
    9. Tito Boeri & Jan van Ours, 2013. "The Economics of Imperfect Labor Markets: Second Edition," Economics Books, Princeton University Press, edition 1, number 10142.
    10. Blázquez, Maite & Herrarte, Ainhoa & Sáez, Felipe, 2019. "Training and job search assistance programmes in Spain: The case of long-term unemployed," Journal of Policy Modeling, Elsevier, vol. 41(2), pages 316-335.
    11. Rüdiger Wapler & Daniel Werner & Katja Wolf, 2018. "Active labour market policies in Germany: do regional labour markets benefit?," Applied Economics, Taylor & Francis Journals, vol. 50(51), pages 5561-5578, November.
    12. Picchio, Matteo & van Ours, Jan C., 2013. "Retaining through training even for older workers," Economics of Education Review, Elsevier, vol. 32(C), pages 29-48.
    13. Piton Céline & Rycx François, 2019. "Unemployment Impact of Product and Labor Market Regulation: Evidence from European Countries," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 9(1), pages 1-32, June.
    14. Grigoli, Francesco & Koczan, Zsoka & Topalova, Petia, 2020. "Automation and labor force participation in advanced economies: Macro and micro evidence," European Economic Review, Elsevier, vol. 126(C).
    15. Eva Van Belle & Ralf Caers & Marijke De Couck & Valentina Di Stasio & Stijn Baert, 2019. "The Signal of Applying for a Job Under a Vacancy Referral Scheme," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 58(2), pages 251-274, April.
    16. Kluve, Jochen & Puerto, Susanna & Robalino, David & Romero, José Manuel & Rother, Friederike & Stöterau, Jonathan & Weidenkaff, Felix & Witte, Marc, 2016. "Do Youth Employment Programs Improve Labor Market Outcomes? A Systematic Review," Ruhr Economic Papers 648, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    17. Goulas, Eleftherios & Zervoyianni, Athina, 2018. "Active labour-market policies and output growth: Is there a causal relationship?," Economic Modelling, Elsevier, vol. 73(C), pages 1-14.
    18. Muller, Paul & van der Klaauw, Bas & Heyma, Arjan, 2017. "Comparing Econometric Methods to Empirically Evaluate Job-Search Assistance," IZA Discussion Papers 10531, Institute of Labor Economics (IZA).
    19. David Card & Jochen Kluve & Andrea Weber, 2018. "What Works? A Meta Analysis of Recent Active Labor Market Program Evaluations," Journal of the European Economic Association, European Economic Association, vol. 16(3), pages 894-931.
    20. Andrews Dan & Ferrari Irene & Saia Alessandro, 2019. "The Costs of Firm Exit and Labour Market Policies: New Evidence from Europe," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(1), pages 1-24, January.
    21. John Martin, 2015. "Activation and active labour market policies in OECD countries: stylised facts and evidence on their effectiveness," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-29, December.

    More about this item

    Keywords

    developing countries; evaluation; labor economics; public policy; welfare state;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vrs:izajdm:v:12:y:2021:i:1:p:27:n:9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.