Does Active Labor Market Policy Increase Employment? Theoretical Considerations and Some Empirical Evidence from Sweden
AbstractActive labour-market policy affects employment through several mechanisms that work in different directions. This paper develops a theoretical framework for structuring the various employment effects of different types of programs and the effects of targeting specific groups. The empirical analysis is based on data for Swedish regions. It addresses the identification problem that arises because the size of labor-market programs is likely to be endogenously determined and affected by unemployment. Most regressions indicate substantial crowding out of regular employment from job-creation measures, whereas the results with respect to labor-market training and targeting are mixed. Training appears, though, to have more favorable effects on regular employment than job-creation schemes. The results are sensitive to the exact specification and the methods of estimation. On the whole the evidence for large favorable employment effects of active labor-market programs appears weak. This warns against putting too much faith in them as a solution to the European unemployment problem. Copyright 1995 by Oxford University Press.
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Bibliographic InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 429.
Length: 43 pages
Date of creation: Apr 1995
Date of revision:
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Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
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Web page: http://www.ifn.se/
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Policy; Labor market; employment programmes; Job-creation;
Other versions of this item:
- Calmfors, Lars & Skedinger, Per, 1995. "Does Active Labour-Market Policy Increase Employment? Theoretical Considerations and Some Empirical Evidence from Sweden," Oxford Review of Economic Policy, Oxford University Press, vol. 11(1), pages 91-109, Spring.
- 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.
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy
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