Labour Market Programmes and the Equity-Efficiency Trade-off
AbstractThis paper studies labour market policy in a society where differently gifted individuals can invest in training to further increase their labour market productivity and where the government seeks both effiency and equity. Frictions in the matching process create unemployment and differently skilled workers face different unemployment risks. We show that in such an environment, training programmes that are targeted to the unemployed complement passive transfers (UI benefits), unlike a general training subsidy. Combining passive subsidies with a training subsidy conditioned on the individual being unemployed (for a while) - the typical Active Labour Market Programme - implies a favorable trade-off between equity and efficiency which encourages high spending on training.
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Bibliographic InfoPaper provided by Copenhagen Business School, Department of Economics in its series Working Papers with number 11-2005.
Length: 42 pages
Date of creation: 13 Sep 2006
Date of revision:
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Postal: Department of Economics, Copenhagen Business School, Solbjerg Plads 3 C, 5. sal, DK-2000 Frederiksberg, Denmark
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Other versions of this item:
- Filges, Trine & Kennes, John & Larsen, Birthe & Tranæs, Torben, 2011. "Labour market programmes and the equity-efficiency trade-off," Journal of Macroeconomics, Elsevier, vol. 33(4), pages 738-753.
- H00 - Public Economics - - General - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-09-23 (All new papers)
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