What active labor market policy works in a recession?
AbstractThis paper discusses the case for expanding active labor market policy in recession. We find that there is reasonable case for relying more heavily on certain kinds of programs. The argument is tied to the varying size of the lock-in effect in boom and recession. If programs with relatively large lock-in effects should ever be used, they should be used in a downturn. The reason is simply that the cost of forgoing search time is lower in recession. We also provide new evidence on the relative effectiveness of different kinds of programs over the business cycle. In particular we compare an on-the-job training scheme with (traditional) labor market training. We find that labor market training is relatively more effective in recession. This result is consistent with our priors since labor market training features relative large lock-in effects.
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Bibliographic InfoPaper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2011:2.
Length: 35 pages
Date of creation: 26 Jan 2011
Date of revision:
Active labor market policy; business cycle; unemployment;
Other versions of this item:
- Forslund, Anders & Fredriksson, Peter & Vikström, Johan, 2011. "What active labor market policy works in a recession?," Research Papers in Economics 2011:9, Stockholm University, Department of Economics.
- J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
- J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-05 (All new papers)
- NEP-LAB-2011-03-05 (Labour Economics)
- NEP-LTV-2011-03-05 (Unemployment, Inequality & Poverty)
- NEP-MAC-2011-03-05 (Macroeconomics)
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.:
- Raaum, Oddbjørn & Torp, Hege & Zhang, Tao, 2003. "Business cycles and the impact of labour market programmes," Memorandum 14/2002, Oslo University, Department of Economics.
- Schmieder, Johannes F. & Wachter, Till von & Bender, Stefan, 2010.
"The effects of unemployment insurance on labor supply and search outcomes : regression discontinuity estimates from Germany,"
IAB Discussion Paper
201004, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
- Johannes F. Schmieder & Till von Wachter & Stefan Bender, 2009. "The Effects of Unemployment Insurance on Labor Supply and Search Outcomes: Regression Discontinuity Estimates from Germany," Discussion Papers 0910-08, Columbia University, Department of Economics.
- Kluve, Jochen, 2013. "Aktive Arbeitsmarktpolitik: Maßnahmen, Zielsetzungen, Wirkungen," Working Papers 07/2013, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
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