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The political economy of public employment programs

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  • Fredriksson, Peter

Abstract

In this paper we study the consequences of endogenous active labor market policies. In particular it is assumed that all viable policies have to please the employed majority. The main objective is to seek the answer to the following question: In what sense does the political equilibrium deviate from the welfare optimum? We find that the political process yields excessive program activity under highly plausible circumstances. Thereason for this deviation from constrained efficiency is that active labor market policy inflicts costs on firms that are ignored by the employed.
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  • Fredriksson, Peter, 1999. "The political economy of public employment programs," Journal of Public Economics, Elsevier, vol. 72(3), pages 487-504, June.
    • Handle: RePEc:eee:pubeco:v:72:y:1999:i:3:p:487-504
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    Cited by:

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    2. 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.
    3. Calmfors, Lars, 1998. "Unemployment, Labour-Market Reform and Monetary Union," Seminar Papers 639, Stockholm University, Institute for International Economic Studies.
    4. Sunanda Roy, 2007. "Self insurance and public employment programs," Economics Bulletin, AccessEcon, vol. 4(31), pages 1-15.

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    More about this item

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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