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What active labor market policy works in a recession?

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Author Info

  • Forslund, Anders

    ()
    (IFAU - Institute for Labour Market Policy Evaluation)

  • Fredriksson, Peter

    ()
    (Department of Economics, Stockholm University)

  • Vikström, Johan

    ()
    (IFAU - Institute for Labour Market Policy Evaluation)

Abstract

This 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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File URL: http://www.ifau.se/Upload/pdf/se/2011/wp11-02-What-active-labor-market-policy-works-in-a-recession.pdf
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Bibliographic Info

Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2011:2.

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Length: 35 pages
Date of creation: 26 Jan 2011
Date of revision:
Handle: RePEc:hhs:ifauwp:2011_002

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Keywords: Active labor market policy; business cycle; unemployment;

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  1. 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.
  2. Raaum, Oddbjørn & Torp, Hege & Zhang, Tao, 2003. "Business cycles and the impact of labour market programmes," Memorandum 14/2002, Oslo University, Department of Economics.
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Cited by:
  1. 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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