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Active labor market policies in the OECD and in selected transition economies

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  • Lehmann, Hartmut

Abstract

Transition economies have introduced a range of OECD active labor market policies to combat unemployment - albeit often on paper only, as with rising unemployment passive policies have crowded out active ones. But even in the Czech Republic, active labor market policies have contributed only marginally to reducing unemployment. One task for policymakers in Central and Eastern Europe must be to conveythe message that, even under the best circumstances, active labor policies can play only a marginal role in reducing unemployment. OECD labor policies cannot be applied mechanically in Central and Eastern Europe because the situation there is different. Severe and persistent shortages in capital and managerial ability are sure to keep labor demand weak in the medium term, while labor supply will be abundant. As enterprises are restructured and liquidated, the newly unemployed workers cannot be absorbed by the weak private sector and must compete for scarce jobs. Women and older, less educated men have particular trouble finding work. Which active labor policies does the author suggest might be effective? Limited funds for active labor policies might best be spent retraining the most able unemployed workers to develop skills needed in the private sector. Public employment programs might be targeted especially to problem groups of workers and to the long-term unemployed - more for reasons of equity than of efficiency. The point is to have a clear idea whether both aims of efficiency and equity can be pursued and, if efficiency gains are unrealistic, whether equity considerations are politically indispensable. Because nontradable services are underdeveloped, Central and Eastern European countries might eliminate credit rationing that discourages self-employment (the self-employed have trouble getting financing). Improving consulting services for the unemployed in Hungary, Poland, and Russia makes more sense than applying a broad menu of OECD programs. The labor market in the Russian Federation appears to be more dynamic than in Hungary and Poland, but this is probably because of massive labor hoarding in Russian enterprises. Once they start shedding labor in earnest, their employment figures will look more like those in the other Central and Eastern European countries.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1502.

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Date of creation: 31 Aug 1995
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Handle: RePEc:wbk:wbrwps:1502

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Related research

Keywords: Labor Markets; Environmental Economics&Policies; Labor Policies; Public Health Promotion; Health Monitoring&Evaluation; Environmental Economics&Policies; Labor Markets; Health Monitoring&Evaluation; Economic Theory&Research; Youth and Governance;

References

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  1. Haskel, Jonathan & Jackman, Richard, 1988. "Long-term Unemployment in Britain and the Effects of the Community Programme," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 50(4), pages 379-408, November.
  2. Guy Standing & T. Chetvernina, 1994. "Enigmas of Russian Unemployment: (Based on Surveys of Employment Centers in Leningrad Oblast)," Problems of Economic Transition, M.E. Sharpe, Inc., vol. 37(7), pages 3-15, November.
  3. L Bellmann & S Estrin & H Lehmann & Jonathan Wadsworth, 1992. "The Eastern German Labour Market in Transition: Gross Flow Estimates from Panel Data," CEP Discussion Papers dp0102, Centre for Economic Performance, LSE.
  4. Burda, Michael C, 1992. "Unemployment, Labour Market Institutions and Structural Change in Eastern Europe," CEPR Discussion Papers 746, C.E.P.R. Discussion Papers.
  5. Burda, Michael C & Lubyová, Martina, 1995. "The Impact of Active Labour Market Policies: A Closer Look at the Czech and Slovak Republics," CEPR Discussion Papers 1102, C.E.P.R. Discussion Papers.
  6. Orley Ashenfelter & David Card, 1984. "Using the Longitudinal Structure of Earnings to Estimate the Effect of Training Programs," NBER Working Papers 1489, National Bureau of Economic Research, Inc.
  7. Burda, Michael C & Funke, Michael, 1993. "Eastern Germany: Can't We Be More Optimistic?," CEPR Discussion Papers 863, C.E.P.R. Discussion Papers.
  8. M Schaffer, 1994. "Government Financial Transfers and Enterprise Adjustments in Russia," CEP Discussion Papers dp0191, Centre for Economic Performance, LSE.
  9. Toikka, Richard S, 1976. "A Markovian Model of Labor Market Decisions by Workers," American Economic Review, American Economic Association, vol. 66(5), pages 821-34, December.
  10. Steiner, Viktor & Kwiatkowski, Eugeniusz, 1995. "The Polish labour market in transition," ZEW Discussion Papers 95-03, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  11. Peter Jäckel, 1994. "Neue Bundesländer : weiterer Anstieg der Industrieinvestitionen," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 47(24), pages 11-15, October.
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Citations

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Cited by:
  1. Jeruzalski, Tomasz & Tyrowicz, Joanna, 2009. "(In)Efficiency of Matching - The Case of A Post-transition Economy," MPRA Paper 16598, University Library of Munich, Germany.
  2. Puhani, Patrick A. & Steiner, Viktor, 1996. "Public works for Poland? Active labour market policies during transition," ZEW Discussion Papers 96-01, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Marek Gora & Grzegorz Kula & Oleksandr Rohozynsky & Magdalena Rokicka & Anna Ruzik, 2009. "Social Security, Labour Market and Restructuring: Current Situation and Expected Outcomes of Reforms," CASE Network Reports 0090, CASE-Center for Social and Economic Research.
  4. Rodríguez-Planas, Núria & Benus, Jacob, 2006. "Evaluating Active Labor Market Programs in Romania," IZA Discussion Papers 2464, Institute for the Study of Labor (IZA).
  5. Özlem Onaran, 2007. "Jobless growth in the Central and Eastern European Countries: A country specific panel data analysis for the manufacturing industry," Department of Economics Working Papers wuwp103, Vienna University of Economics, Department of Economics.
  6. Hartmut Lehmann & Jochen Kluve, 2010. "Assessing Active Labour Market Policies in Transition Economies," AIEL Series in Labour Economics, in: Floro Ernesto Caroleo & Francesco Pastore (ed.), The Labour Market Impact of the EU Enlargement. A New Regional Geography of Europe?, edition 1, chapter 11, pages 275-307 AIEL - Associazione Italiana Economisti del Lavoro.
  7. Hujer, Reinhard & Zeiss, Christopher, 2005. "Vermittlungsgutscheine: Zwischenergebnisse der Begleitforschung 2004 : Teil 4: Makroökonomische Wirkungsanalyse," IAB-Forschungsbericht 200504, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  8. Hujer, Reinhard & Zeiss, Christopher, 2006. "Macroeconomic Effects of Short-Term Training Measures on the Matching Process in Western Germany," IZA Discussion Papers 2489, Institute for the Study of Labor (IZA).
  9. Ruppert, Elizabeth, 1996. "Unemployment insurance in Algeria : implications for a labor market in transition," Policy Research Working Paper Series 1659, The World Bank.
  10. Puhani, Patrick A., 1999. "Estimating the effects of public training on Polish unemployment by way of the augmented matching function approach," ZEW Discussion Papers 99-38, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  11. Marek Góra & Oleksandr Rohozynsky, 2008. "Social Security Influence on Labor Mobility: Possible Opportunities and Challenges," ESCIRRU Working Papers 7, DIW Berlin, German Institute for Economic Research.
  12. Patrick Puhani & Viktor Steiner, 1997. "The Effectiveness and Efficiency of Active Labour Market Policies in Poland," Empirica, Springer, vol. 24(3), pages 209-231, October.
  13. Özlem Onaran, 2008. "Jobless Growth in the Central and Eastern European Countries," Working Papers wp165, Political Economy Research Institute, University of Massachusetts at Amherst.
  14. Hagen, Tobias, 2003. "Three Approaches to the Evaluation of Active Labour Market Policy in East Germany Using Regional Data," ZEW Discussion Papers 03-27, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  15. Núria Rodríguez-Planas & Jacob Benus, 2007. "Evaluating Active Labor Markets in Romania," UFAE and IAE Working Papers 699.07, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  16. Nuria Rodriguez-Planas† & Jacob Benus, 2007. "Evaluative Active Labor Market Programmes in Romania," Working Papers 2007-31, FEDEA.
  17. Hujer, Reinhard & Zeiss, Christopher, 2003. "Macroeconomic Impacts of ALMP on the Matching Process in West Germany," IZA Discussion Papers 915, Institute for the Study of Labor (IZA).
  18. Puhani, Patrick A, 1999. "Public Training and Outflows from Unemployment: An Augmented Matching Function Approach on Polish Regional Data," CEPR Discussion Papers 2244, C.E.P.R. Discussion Papers.

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