The Political Economy of Public Employment Programs
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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|Date of creation:||25 Jan 1997|
|Date of revision:|
|Publication status:||Published in Journal of Public Economics, 1999, pages 487-504.|
|Contact details of provider:|| Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden|
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Web page: http://www.nek.uu.se/
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- Anders Forslund & Alan B. Krueger, 1997.
"An Evaluation of the Swedish Active Labor Market Policy: New and Received Wisdom,"
in: The Welfare State in Transition: Reforming the Swedish Model, pages 267-298
National Bureau of Economic Research, Inc.
- Anders Forslund & Alan B. Krueger, 1994. "An Evaluation of the Swedish Active Labor Market Policy: New and Received Wisdom," NBER Working Papers 4802, National Bureau of Economic Research, Inc.
- Anders Forslund & Alan Krueger, 1994. "An Evaluation of the Swedish Active Labor Market Policy: New and Received Wisdom," Working Papers 711, Princeton University, Department of Economics, Industrial Relations Section..
- P. Diamond, 1980.
"Mobility Costs, Frictional Unemployment and Efficiency,"
257, Massachusetts Institute of Technology (MIT), Department of Economics.
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- Diamond, Peter A., 1980. "An alternative to steady-state comparisons," Economics Letters, Elsevier, vol. 5(1), pages 7-9.
- DiTella, Rafael & MacCulloch, Robert, 2001.
"The determination of unemployment benefits,"
ZEI Working Papers
B 04-2001, ZEI - Center for European Integration Studies, University of Bonn.
- Pissarides, Christopher A, 1985. "Short-run Equilibrium Dynamics of Unemployment Vacancies, and Real Wages," American Economic Review, American Economic Association, vol. 75(4), pages 676-90, September.
- Oliver Jean Blanchard & Peter Diamond, 1989. "The Beveridge Curve," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 1-76.
- Arthur J. Hosios, 1990. "On The Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Oxford University Press, vol. 57(2), pages 279-298.
- Wright, Randall, 1986. "The redistributive roles of unemployment insurance and the dynamics of voting," Journal of Public Economics, Elsevier, vol. 31(3), pages 377-399, December.
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