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Assessing Active Labor Market Policies in Transition Economies

  • H. Lehmann
  • J. Kluve

With the beginning of economic reform in the formerly centrally planned economies of Central and Eastern Europe (CEE), open unemployment rapidly reached comparable levels to those in Western economies. Governments in the region reacted to this rise by adopting active labor market policies (ALMP) as an important tool in the fight against unemployment. Before reviewing the evidence on the efficacy of such policies we look at the scope and the rationale of ALMP measures in a transitional context. Since government budgets are very tight in these countries it is important to evaluate ALMP in a rigorous fashion. The paper analyzes macroeconometric and microeconometric methods of program evaluation, as they were applied in transition economies. Both these approaches have a raison d’être and should be understood as complementing. Providing a selective review of the literature, some of the strengths and the pitfalls of the two approaches are highlighted. We also point to the lessons one can draw from the surveyed studies for a better understanding of how active measures affect labor market outcomes in this set of countries.

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Paper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number 646.

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Date of creation: Oct 2008
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Handle: RePEc:bol:bodewp:646
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  1. Boeri, Tito & Burda, Michael C, 1995. "Active Labour Market Policies, Job Matching and the Czech Miracle," CEPR Discussion Papers 1302, C.E.P.R. Discussion Papers.
  2. Lehmann, Hartmut, 1995. "Active labor market policies in the OECD and in selected transition economies," Policy Research Working Paper Series 1502, The World Bank.
  3. Kluve, Jochen & Lehmann, Hartmut & Schmidt, Christoph M., 2008. "Disentangling Treatment Effects of Active Labor Market Policies: The Role of Labor Force Status Sequences," Labour Economics, Elsevier, vol. 15(6), pages 1270-1295, December.
  4. Micklewright, John & Nagy, Gyula, 2005. "Job Search Monitoring and Unemployment Duration in Hungary: Evidence from a Randomised Control Trial," IZA Discussion Papers 1839, Institute for the Study of Labor (IZA).
  5. James J. Heckman & Jeffrey A. Smith, 1999. "The Pre-Program Earnings Dip and the Determinants of Participation in a Social Program: Implications for Simple Program Evaluation Strategies," NBER Working Papers 6983, National Bureau of Economic Research, Inc.
  6. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
  7. Heckman, James J & Smith, Jeffrey A., 2003. "The determinants of participation in a social program: Evidence from a prototypical job training program," Working Paper Series 2003:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  8. Tobin, James, 1972. "Inflation and Unemployment," American Economic Review, American Economic Association, vol. 62(1), pages 1-18, March.
  9. Rodríguez-Planas, Núria & Benus, Jacob, 2006. "Evaluating Active Labor Market Programs in Romania," IZA Discussion Papers 2464, Institute for the Study of Labor (IZA).
  10. Aakvik, Arild & Heckman, James J. & Vytlacil, Edward J., 2005. "Estimating treatment effects for discrete outcomes when responses to treatment vary: an application to Norwegian vocational rehabilitation programs," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 15-51.
  11. Kluve, Jochen, 2006. "The Effectiveness of European Active Labor Market Policy," IZA Discussion Papers 2018, Institute for the Study of Labor (IZA).
  12. Guido W. Imbens, 2003. "Nonparametric Estimation of Average Treatment Effects under Exogeneity: A Review," NBER Technical Working Papers 0294, National Bureau of Economic Research, Inc.
  13. Jochen Kluve & Christoph M. Schmidt, 2002. "Can training and employment subsidies combat European unemployment?," Economic Policy, CEPR;CES;MSH, vol. 17(35), pages 409-448, October.
  14. Boeri, Tito & Lehmann, Hartmut, 1999. "Unemployment and Labor Market Policies in Transition Countries," Journal of Comparative Economics, Elsevier, vol. 27(1), pages 1-3, March.
  15. Boeri, Tito, 1997. "Learning from Transition Economies: Assessing Labor Market Policies across Central and Eastern Europe," Journal of Comparative Economics, Elsevier, vol. 25(3), pages 366-384, December.
  16. James J. Heckman & Hidehiko Ichimura & Petra Todd, 1998. "Matching As An Econometric Evaluation Estimator," Review of Economic Studies, Oxford University Press, vol. 65(2), pages 261-294.
  17. Martina Lubyova & Jan C. van Ours, 1998. "Effects of Active Labor Market Programs on the Transition Rate from Unemployment into Regular Jobs in the Slovak Republic," William Davidson Institute Working Papers Series 213, William Davidson Institute at the University of Michigan.
  18. Kathryn H. Anderson & Richard V. Burkhauser & Jennie E. Raymond, 1993. "The Effect of Creaming on Placement Rates under the Job Training Partnership Act," ILR Review, Cornell University, ILR School, vol. 46(4), pages 613-624, July.
  19. Tito Boeri, 1994. ""Transitional" unemployment," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(1), pages 1-25, 03.
  20. H Lehmann, 1993. "The Effectiveness of the Restart Programme and Enterprise Allowance Scheme," CEP Discussion Papers dp0139, Centre for Economic Performance, LSE.
  21. Burgess, Simon M, 1993. "A Model of Competition between Unemployed and Employed Job Searchers: An Application to the Unemployment Outflow Rate in Britain," Economic Journal, Royal Economic Society, vol. 103(420), pages 1190-204, September.
  22. Jackman, Richard & Layard, Richard, 1991. "Does Long-term Unemployment Reduce a Person's Chance of a Job? A Time-Series Test," Economica, London School of Economics and Political Science, vol. 58(229), pages 93-106, February.
  23. Richard Blundell & Monica Costa Dias, 2000. "Evaluation methods for non-experimental data," Fiscal Studies, Institute for Fiscal Studies, vol. 21(4), pages 427-468, January.
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