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Substitution and crowding-out effects of active labour market policy


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  • Jahn, Elke J.
  • Wagner, Thomas


The search model contains two matching technologies, the public employment service (PES) with its type-specific registers for workers and vacancies, and the search market where firms advertise vacancies and unemployed who have not been placed by the PES search for jobs. The placement activity of the PES increases the bargained wages, reduces active job search, decreases the number of advertised vacancies, but - compared with the laissez- faire regime - increases employment and per capita consumption. Of all the instruments of ALMP, the probabilities of a match, the portion of unskilled not interested in a job, and the hiring subsidies generate crowding-out effects. The productivity of the unskilled, (re-employment)bonuses, penalties for violations of the search rule, and the stringency of the search rule cause crowdingin effects. Assistance for problem groups is less effective than promoting active job search. -- Das Suchmodel umfasst zwei Matching-Technologien, die des PES mit typspezifischen Registern für Arbeitslose und Vakanzen und die des Suchmarkts, wo Firmen Vakanzen annoncieren und nicht Vermittelte nach Stellen suchen. Die Vermittlungstätigkeit des PES erhöht die Lohnkosten, reduziert die aktive Suche und die annoncierten Vakanzen, senkt im Vergleich zum Laissez-faire Regime die Arbeitslosenquote und steigert den Pro-Kopf-Konsum. Von den Instrumentvariablen der ALMP verdrängen die Matchwahrscheinlichkeiten, der Anteil der "Arbeitsunwilligen" und die Lohnkostenzuschüsse Arbeitsplätze. Die Produktivität der Geringqualifizierten, (Wiederbeschäftigungs-) Prämien, Sanktionen für Suchregel-Verstöße sowie die Intensität der Regeldurchsetzung senken die Arbeitslosigkeit. Die Förderung von "Problemgruppen" ist weniger wirkungsvoll als die Förderung der aktiven Jobsuche.

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Paper provided by Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics in its series Discussion Papers with number 2.

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Date of creation: 2000
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Handle: RePEc:zbw:faulre:2

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Keywords: Matching model; active labor market policy; PES; search market; heterogeneous unemployment pool; ranking;

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  1. John P Martin, 1998. "What Works Among Active Labour Market Policies: Evidence from OECD Countries' Experiences," RBA Annual Conference Volume, in: Guy Debelle & Jeff Borland (ed.), Unemployment and the Australian Labour Market Reserve Bank of Australia.
  2. 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.
  3. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
  4. Mortensen, Dale T & Pissarides, Christopher A, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 397-415, July.
  5. Pissarides, C A, 1979. "Job Matchings with State Employment Agencies and Random Search," Economic Journal, Royal Economic Society, vol. 89(356), pages 818-33, December.
  6. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages C1-33, March.
  7. Mortensen, Dale T. & Pissarides, Christopher A., 1999. "New developments in models of search in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 39, pages 2567-2627 Elsevier.
  8. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173, September.
  9. Diamond, Peter A, 1982. "Wage Determination and Efficiency in Search Equilibrium," Review of Economic Studies, Wiley Blackwell, vol. 49(2), pages 217-27, April.
  10. Newbery, David M G, 1995. "Tax and Benefit Reform in Central and Eastern Europe," CEPR Discussion Papers 1167, C.E.P.R. Discussion Papers.
  11. 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.
  12. Burda, Michael & Wyplosz, Charles, 1994. "Gross worker and job flows in Europe," European Economic Review, Elsevier, vol. 38(6), pages 1287-1315, June.
  13. Hosios, Arthur J, 1990. "On the Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 57(2), pages 279-98, April.
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