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Can active labor market policy be counter-productive?

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  • Saint-Paul, Gilles

Abstract

We study active labor market policies (ALMP) in a matching model with heterogenous workers. ALMPs are modeled as a subsidy to job search, and search takes place along an extensive margin. An additional job seeker affects the quality of unemployed workers. As a result, the Hosios conditions for efficiency are no longer valid: to replicate the optimum the worker share in bargaining must exceed the Hosios level, and one must impose a tax on job search activity. We also characterize the coalition in favor of ALMP.

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  • Saint-Paul, Gilles, 2015. "Can active labor market policy be counter-productive?," Research in Economics, Elsevier, vol. 69(1), pages 26-36.
    • Handle: RePEc:eee:reecon:v:69:y:2015:i:1:p:26-36
    DOI: 10.1016/j.rie.2014.11.001
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    References listed on IDEAS

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    Cited by:

    1. Francesc Obiols-Homs & Virginia Sánchez-Marcos, 2022. "Labor Force Participation, Wages and Turbulence," Working Papers 1347, Barcelona School of Economics.
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    3. Etro, Federico, 2015. "Research in economics and political economy," Research in Economics, Elsevier, vol. 69(3), pages 261-264.

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    More about this item

    Keywords

    Active labor market policies; Job matching; Hosios condition;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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