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A framework for analyzing the political support for active labor market policy

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  • Saint-Paul, Gilles

Abstract

We develop a general equilibrium analysis of the impact of active labour market policy on unemployment, wages and the welfare of the employed. This framework is used to assess the political support in favour of such policies and to relate it to the working of such policies and other parameters characterizing the economic environment. The main finding is that if the employed have little exposure to unemployment and if the demand for unskilled labour is inelastic, there may be political support for policies which actually raise the equilibrium level of total unemployment.
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  • Saint-Paul, Gilles, 1998. "A framework for analyzing the political support for active labor market policy," Journal of Public Economics, Elsevier, vol. 67(2), pages 151-165, February.
    • Handle: RePEc:eee:pubeco:v:67:y:1998:i:2:p:151-165
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    References listed on IDEAS

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    1. Saint-Paul, Gilles, 1996. "Are the unemployed unemployable?," European Economic Review, Elsevier, vol. 40(7), pages 1501-1519, August.
    2. Kimball, Miles S, 1994. "Labor-Market Dynamics When Unemployment is a Worker Discipline Device," American Economic Review, American Economic Association, vol. 84(4), pages 1045-1059, September.
    3. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    4. Georges, Christophre, 1995. "Adjustment costs and indeterminacy in perfect foresight models," Journal of Economic Dynamics and Control, Elsevier, vol. 19(1-2), pages 39-50.
    5. Christopher A. Pissarides, 1992. "Loss of Skill During Unemployment and the Persistence of Employment Shocks," The Quarterly Journal of Economics, Oxford University Press, vol. 107(4), pages 1371-1391.
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    1. O političkoj podršci reforme radnog zakonodavstva
      by cronomy in Cronomy on 2012-12-13 13:35:12

    Citations

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    Cited by:

    1. Gilles Saint-Paul, 2004. "Why are European Countries Diverging in their Unemployment Experience?," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 49-68, Fall.
    2. Saint-Paul, Gilles, 2015. "Can active labor market policy be counter-productive?," Research in Economics, Elsevier, vol. 69(1), pages 26-36.
    3. Noritaka Kudoh, 2007. "Unemployment Policies In An Economy With Adverse Selection," Bulletin of Economic Research, Wiley Blackwell, vol. 59(2), pages 179-196, April.
    4. Anesi, Vincent & De Donder, Philippe, 2009. "A Positive Theory of Unemployment Insurance and Employment Protection," CEPR Discussion Papers 7333, C.E.P.R. Discussion Papers.
    5. Jo Seldeslachts, 2008. "Synchronising Deregulation In Product And Labour Markets," Scottish Journal of Political Economy, Scottish Economic Society, vol. 55(5), pages 591-617, November.
    6. Fehn, Rainer, 2000. "Financing structural change, venture capital, and unemployment: What is the role of investor protection?," Discussion Paper Series 36, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    7. Ronconi, Lucas & Kanbur, Ravi & López-Cariboni, Santiago, 2019. "Who Demands Labour (De)Regulation in the Developing World? Insider–Outsider Theory Revisited," IZA Discussion Papers 12831, Institute of Labor Economics (IZA).
    8. Miller, J.G., 1996. "A treatise on labour : A matching-model analysis of labour-market programmes," Other publications TiSEM 169d0a47-eda5-497f-98af-5, Tilburg University, School of Economics and Management.
    9. Seppo Honkapohja & Frank Westermann, 2009. "Labour Market Reform in Europe," Palgrave Macmillan Books, in: Seppo Honkapohja & Frank Westermann (ed.), Designing the European Model, chapter 2, pages 61-81, Palgrave Macmillan.
    10. Berthold, Norbert & Fehn, Rainer & Thode, Eric, 1999. "Rigide Arbeitsmärkte und ungleiche Einkommensverteilung: Ein unlösbares Dilemma?," Discussion Paper Series 31, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    11. Evelyn Ribi, 2009. "Optimal Size and Intensity of Job Search Assistance Programs," University of St. Gallen Department of Economics working paper series 2009 2009-19, Department of Economics, University of St. Gallen.
    12. Lars Calmfors & Giancarlo Corsetti & Seppo Honkapohja & John Kay & Willi Leibfritz & Gilles Saint-Paul & Hans-Werner Sinn & Xavier Vives, 2005. "Chapter 3: Longer Working Hours - the Beginning of a new Trend?," EEAG Report on the European Economy, CESifo, vol. 0, pages 51-68, March.
    13. Jo Seldeslachts, 2002. "Interactions Between Product and Labour Market Reforms," UFAE and IAE Working Papers 519.02, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    14. Neugart, Michael & Storrie, Donald, 2002. "Temporary work agencies and equilibrium unemployment," Discussion Papers, Research Unit: Labor Market Policy and Employment FS I 02-203, WZB Berlin Social Science Center.
    15. Epstein, Gil S. & Nitzan, Shmuel, 1999. "The Endogenous Determination of Minimum Wage," IZA Discussion Papers 73, Institute of Labor Economics (IZA).
    16. Edward Bierhanzl, 1999. "Active Labor Marketed Policies and Measured Unemployment in Europe," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 15(Fall 1999), pages 109-123.
    17. Rainer Fehn & Carsten-Patrick Meier, 2001. "The Positive Economics of Labor Market Rigidities and Investor Protection," CESifo Working Paper Series 456, CESifo.
    18. Fehn, Rainer & Meier, Carsten-Patrick, 2000. "The positive economics of corporatism and corporate governance," Kiel Working Papers 982, Kiel Institute for the World Economy (IfW Kiel).
    19. Calmfors, Lars, 1998. "Unemployment, Labour-Market Reform and Monetary Union," Seminar Papers 639, Stockholm University, Institute for International Economic Studies.
    20. Knotz, Carlo Michael, 2012. "Measuring the 'new balance of rights and responsibilities' in labor market policy: A quantitative overview of activation strategies in 20 OECD countries," Working papers of the ZeS 06/2012, University of Bremen, Centre for Social Policy Research (ZeS).
    21. Lars Calmfors, 1998. "Unemployment, Labour-market Reform and Monetary Union," CESifo Working Paper Series 173, CESifo.
    22. Fredriksson, Per G. & Gaston, Noel, 1999. "The "greening" of trade unions and the demand for eco-taxes," European Journal of Political Economy, Elsevier, vol. 15(4), pages 663-686, November.
    23. Berthold, Norbert & Fehn, Rainer, 1999. "Labor market policy in a global economy," Discussion Paper Series 26, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.

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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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