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An Evaluation of the Swedish Active Labor Market Policy: New and Received Wisdom

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  • Anders Forslund
  • Alan Krueger

Abstract

About 3% of GNP is spent on government labor market programs in Sweden, compared to 2% in Germany and less than 0.5% in the U.S. In Sweden these programs include extensive job training, public sector relief work, recruitment subsidies, youth programs, mobility bonuses, and unemployment benefits. Using county-level data, we provide new evidence that public relief workers displace other workers, especially in the construction sector. Our review of the previous literature suggests that job training programs have small effects on wages and re-employment in Sweden, but precise inferences are difficult because of small sample sizes. We also investigate alternative reasons for the stability of the Beveridge Curve in Sweden, and compare regional evolutions of employment and unemployment in Sweden and the U.S. Lastly, we present cross-country analysis for 1993 which, contrary to studies that use earlier data, shows that the extent of a country's active labor market programs is positively associated with the national unemployment rate.

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Bibliographic Info

Paper provided by Princeton University, Department of Economics, Industrial Relations Section. in its series Working Papers with number 711.

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Date of creation: Jul 1994
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Handle: RePEc:pri:indrel:dsp01rj430453h

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Keywords: Sweden; labor market; active labor market programs;

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References

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  1. Michael E. Borus & Daniel S. Hamermesh, 1978. "Estimating Fiscal Substitution by Public Service Employment Programs," Journal of Human Resources, University of Wisconsin Press, vol. 13(4), pages 561-565.
  2. Bean, C R & Layard, P R G & Nickell, S J, 1986. "The Rise in Unemployment: A Multi-country Study," Economica, London School of Economics and Political Science, vol. 53(210(S)), pages S1-22, Supplemen.
  3. Per-Anders Edin & Robert Topel, 1997. "Wage Policy and Restructuring: The Swedish Labor Market since 1960," NBER Chapters, in: The Welfare State in Transition: Reforming the Swedish Model, pages 155-202 National Bureau of Economic Research, Inc.
  4. Lindbeck, A., 1990. "The Swedish Experience," Papers 482, Stockholm - International Economic Studies.
  5. Calmfors, L., 1992. "Lessons from the Macroeconomic Experience of Sweden," Papers 522, Stockholm - International Economic Studies.
  6. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
  7. Decressin, Jörg & Fatás, Antonio, 1994. "Regional Labour Market Dynamics in Europe," CEPR Discussion Papers 1085, C.E.P.R. Discussion Papers.
  8. Ackum, Susanne, 1991. " Youth Unemployment, Labor Market Programs and Subsequent Earnings," Scandinavian Journal of Economics, Wiley Blackwell, vol. 93(4), pages 531-43.
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