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Assessing Active Labor Market Policies in Transition Economies

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  • H. Lehmann
  • J. Kluve

Abstract

With the beginning of economic reform in the formerly centrally planned economies of Central and Eastern Europe (CEE), open unemployment rapidly reached levels comparable to those in Western economies. Governments in the region reacted to this rise by adopting active labour market policies (ALMP) as an important tool in the fight against unemployment. Before reviewing the evidence on the efficacy of such policies we look at the scope and the rationale of ALMP measures in a transitional context. Since government budgets are very tight in these countries it is important to evaluate ALMP in a rigorous fashion. The paper analyses macroeconometric and microeconometric methods of program evaluation as they were applied in transition economies. Both these approaches have a raison d’être and should be understood as complementing. Providing a selective review of the literature, it is possible to highlight some of the strengths and the pitfalls of the two approaches. We also point to the lessons one can draw from the surveyed studies for a better understanding of how active measures affect labour market outcomes in this set of countries.

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Paper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number 646.

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Date of creation: Oct 2008
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Handle: RePEc:bol:bodewp:646

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References

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  1. Tito Boeri & Michael Burda, 1997. "Active Labour Market Policies, Job Matching and the Czech Miracle," Politická ekonomie, University of Economics, Prague, University of Economics, Prague, vol. 1997(2), pages 183-192.
  2. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 65(2), pages 261-94, April.
  3. John Micklewright & Nagy Gyula, 2005. "Job Search Monitoring and Unemployment Duration in Hungary: Evidence from a Randomised Control Trial," Budapest Working Papers on the Labour Market, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences 0509, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  4. Lubyova, Martina & van Ours, Jan C., 1999. "Effects of Active Labor Market Programs on the Transition Rate from Unemployment into Regular Jobs in the Slovak Republic," Journal of Comparative Economics, Elsevier, vol. 27(1), pages 90-112, March.
  5. James J. Heckman & Jeffrey Smith, 2003. "The Determinants of Participation in a Social Program: Evidence from a Prototypical Job Training Program," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers, University of Western Ontario, CIBC Centre for Human Capital and Productivity 20034, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  6. Guido W. Imbens, 2004. "Nonparametric Estimation of Average Treatment Effects Under Exogeneity: A Review," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 4-29, February.
  7. Boeri, Tito, 1997. "Learning from Transition Economies: Assessing Labor Market Policies across Central and Eastern Europe," Journal of Comparative Economics, Elsevier, vol. 25(3), pages 366-384, December.
  8. Richard Blundell & Monica Costa Dias, 2000. "Evaluation methods for non-experimental data," Fiscal Studies, Institute for Fiscal Studies, vol. 21(4), pages 427-468, January.
  9. Jackman, Richard & Layard, Richard, 1991. "Does Long-term Unemployment Reduce a Person's Chance of a Job? A Time-Series Test," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 58(229), pages 93-106, February.
  10. Rodríguez-Planas, Núria & Benus, Jacob, 2006. "Evaluating Active Labor Market Programs in Romania," IZA Discussion Papers 2464, Institute for the Study of Labor (IZA).
  11. H Lehmann, 1993. "The Effectiveness of the Restart Programme and Enterprise Allowance Scheme," CEP Discussion Papers dp0139, Centre for Economic Performance, LSE.
  12. Lehmann, Hartmut, 1995. "Active labor market policies in the OECD and in selected transition economies," Policy Research Working Paper Series 1502, The World Bank.
  13. Tito Boeri, 1994. ""Transitional" unemployment," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 2(1), pages 1-25, 03.
  14. Tobin, James, 1972. "Inflation and Unemployment," American Economic Review, American Economic Association, American Economic Association, vol. 62(1), pages 1-18, March.
  15. Kathryn Anderson & Richard V. Burkhauser & Jennie E. Raymond, 1993. "The effect of creaming on placement rates under the Job Training Partnership Act," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 46(4), pages 613-624, July.
  16. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
  17. Kluve, Jochen & Lehmann, Hartmut & Schmidt, Christoph M., 2008. "Disentangling Treatment Effects of Active Labor Market Policies: The Role of Labor Force Status Sequences," Labour Economics, Elsevier, Elsevier, vol. 15(6), pages 1270-1295, December.
  18. Aakvik, Arild & Heckman, James J. & Vytlacil, Edward J., 2005. "Estimating treatment effects for discrete outcomes when responses to treatment vary: an application to Norwegian vocational rehabilitation programs," Journal of Econometrics, Elsevier, Elsevier, vol. 125(1-2), pages 15-51.
  19. Boeri, Tito & Lehmann, Hartmut, 1999. "Unemployment and Labor Market Policies in Transition Countries," Journal of Comparative Economics, Elsevier, vol. 27(1), pages 1-3, March.
  20. Burgess, Simon M, 1993. "A Model of Competition between Unemployed and Employed Job Searchers: An Application to the Unemployment Outflow Rate in Britain," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 103(420), pages 1190-204, September.
  21. Jochen Kluve, 2006. "The Effectiveness of European Active Labor Market Policy," RWI Discussion Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung 0037, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  22. James J. Heckman & Jeffrey A. Smith, 1999. "The Pre-Program Earnings Dip and the Determinants of Participation in a Social Program: Implications for Simple Program Evaluation Strategies," NBER Working Papers 6983, National Bureau of Economic Research, Inc.
  23. Jochen Kluve & Christoph M. Schmidt, 2002. "Can training and employment subsidies combat European unemployment?," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 17(35), pages 409-448, October.
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Citations

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Cited by:
  1. Lehmann, Hartmut & Muravyev, Alexander, 2011. "Labor Markets and Labor Market Institutions in Transition Economies," IZA Discussion Papers 5905, Institute for the Study of Labor (IZA).
  2. Bashevska, Marija, 2014. "Политиките На Пазарот На Труд И Сиромаштијата Во Македонија, 2008 - 2013
    [Labour market, employment policies and poverty in R. Macedonia, 2008 - 2
    ," MPRA Paper 57768, University Library of Munich, Germany.
  3. H. Lehmann & A. Muravyev, 2010. "Labor market institutions and labor market performance: what can we learn from transition countries?," Working Papers 714, Dipartimento Scienze Economiche, Universita' di Bologna.
  4. Jovan, Zubovic & Jonel, Subic, 2011. "Reviewing development of active labour market policies and the evaluation techniques," MPRA Paper 35282, University Library of Munich, Germany, revised 17 Oct 2011.

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