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Direct displacement effects of labour market programmes: the case of Sweden

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Author Info
Dahlberg, Matz () (IFAU - Office of Labour Market Policy Evaluation)
Forslund, Anders () (IFAU - Office of Labour Market Policy Evaluation)

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Abstract

Using a panel of 260 Swedish municipalities over the period 1987-1996, this paper investigates the direct displacement effects of active labour market programmes (ALMPs). Compared to earlier studies on this topic, we have more and better data. From our GMM estimations, we find that (i) there are direct displacement effects from those ALMPs that generate subsidised labour (in the order of approximately 65 percent), but there seems to be no (significant) displacement effects from training, (ii) most ALMPs seem to increase labour force participation, and (iii) the adjustment to the optimal level of employment seems to be sluggish. A consequence of (ii) is that the earlier studies have overstated the displacement effects (since they nomalised with the labour force).

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Publisher Info
Paper provided by IFAU - Institute for Labour Market Policy Evaluation in its series Working Paper Series with number 1999:7.

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Length: 40 pages
Date of creation: 01 Oct 1999
Date of revision:
Publication status: Forthcoming in Scandinavian Journal of Economics.
Handle: RePEc:hhs:ifauwp:1999_007

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Postal: Labour Market Policy Evaluation, P O Box 513, SE-751 20 Uppsala, Sweden
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Related research
Keywords: Labour market programmes; Displacement effects; GMM estimation;

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Find related papers by JEL classification:
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Blackwell Publishing, vol. 58(2), pages 277-97, April. [Downloadable!] (restricted)
  2. Borge, Lars-Erik & Rattso, Jorn, 1993. "Dynamic Responses to Changing Demand: A Model of the Reallocation Process in Small and Large Municipalities in Norway," Applied Economics, Taylor and Francis Journals, vol. 25(5), pages 589-98, May.
  3. Borge, Lars-Erik & Rattso, Jorn & Sorensen, Rune, 1995. " Local Government Service Production: The Politics of Allocative Sluggishness," Public Choice, Springer, vol. 82(1-2), pages 135-57, January.
  4. Bergström, Pål & Dahlberg, Matz & Johansson, Eva, 1997. "GMM Bootstrapping and Testing in Dynamic Panels," Working Paper Series 1997:10, Uppsala University, Department of Economics.
  5. Courant, Paul N & Gramlich, Edward M & Rubinfeld, Daniel L, 1979. "Public Employee Market Power and the Level of Government Spending," American Economic Review, American Economic Association, vol. 69(5), pages 806-17, December. [Downloadable!] (restricted)
  6. Joshua Angrist & Alan Krueger, 1998. "Empirical Strategies in Labor Economics," Working papers 98-7, Massachusetts Institute of Technology (MIT), Department of Economics.
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  7. Diewert, Walter E & Wales, Terence J, 1987. "Flexible Functional Forms and Global Curvature Conditions," Econometrica, Econometric Society, vol. 55(1), pages 43-68, January. [Downloadable!] (restricted)
    Other versions:
  8. Calmfors, L. & Skedinger, P., 1995. "Does Active Labour Market Policy Increase Employment? - Theoretical Considerations and Some Empirical Evidence from Sweden," Papers 590, Stockholm - International Economic Studies.
    Other versions:
  9. Dahlberg, Matz & Johansson, Eva, 1997. "An Examination of the Dynamic Behavior of Local Governments Using GMM Bootstrapping Methods," Working Paper Series 1997:11, Uppsala University, Department of Economics.
    Other versions:
  10. repec:fth:prinin:401 is not listed on IDEAS
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Nordström Skans, Oskar, 2002. "Age effects in Swedish local labour markets," Working Paper Series 2002:11, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
    Other versions:
  2. Johansson, Kerstin, 2002. "Labor market programs, the discouraged-worker effect, and labor force participation," Working Paper Series 2002:9, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
  3. Johansson, Kerstin, 2006. "Do labor market flows affect labor-force participation?," Working Paper Series 2006:17, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
  4. Johansson, Kerstin, 2002. "Labor Market Programs, the Discouraged-Worker Effect, and Labor Force Participation," Working Paper Series 2002:16, Uppsala University, Department of Economics. [Downloadable!]
  5. Assar Lindbeck, 2005. "Sustainable Social Spending," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  6. Johansson, Kerstin, 2002. "Do labor market programs affect labor force participation?," Working Paper Series 2002:3, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
  7. Carling, Kenneth & Richardson, Katarina, 2001. "The relative efficiency of labor market programs: Swedish experience from the 1990's," Working Paper Series 2001:2, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
  8. 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:
  9. Schröder, Lena, 2004. "The role of youth programmes in the transition from school to work," Working Paper Series 2004:5, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
  10. Nilsson, Anna & Agell, Jonas, 2003. "Crime, Unemployment and Labor Market Programs in Turbulent Times," Research Papers in Economics 2003:13, Stockholm University, Department of Economics. [Downloadable!]
  11. Michael Lechner, 2002. "Mikroökonometrische Evaluation arbeitsmarktpolitischer Massnahmen," University of St. Gallen Department of Economics working paper series 2002 2002-20, Department of Economics, University of St. Gallen. [Downloadable!]
  12. Nilsson, Anna & Agell, Jonas, 2003. "Crime, unemployment and labor market programs in turbulent times," Working Paper Series 2003:14, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
  13. Sacklén, Hans, 2002. "An evaluation of the Swedish trainee replacement schemes," Working Paper Series 2002:7, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
  14. Mörk, Eva, 2003. "The impact of active labor market programs on municipal services," Working Paper Series 2003:2, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
  15. Konle-Seidl, Regina, 2005. "Lessons learned: Internationale Evaluierungsergebnisse zu Wirkungen aktiver und aktivierender Arbeitsmarktpolitik," IAB-Forschungsbericht 200509, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]. [Downloadable!]
  16. Forslund, Anders & Kolm, Ann-Sofie, 2000. "Active labour market policies and real-wage determination - Swedish evidence," Working Paper Series 2000:7, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
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