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The Effectiveness of European Active Labor Market Policy

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  • Kluve, Jochen

    (KfW Development Bank)

Abstract

Measures of Active Labor Market Policy are widely used in European countries, but despite many econometric evaluation studies no conclusive cross-country evidence exists regarding "what program works for what target group under what (economic and institutional) circumstances?". This paper results from an extensive research project for the European Commission aimed at answering that question using a meta-analytical framework. The empirical results are surprisingly clear- cut: Rather than contextual factors such as labor market institutions or the business cycle, it is almost exclusively the program type that matters for program effectiveness. While direct employment programs in the public sector appear detrimental, wage subsidies and "Services and Sanctions" can be effective in increasing participants' employment probability.

Suggested Citation

  • Kluve, Jochen, 2006. "The Effectiveness of European Active Labor Market Policy," IZA Discussion Papers 2018, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2018
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    More about this item

    Keywords

    Active Labor Market Policy; program evaluation; meta analysis;
    All these keywords.

    JEL classification:

    • J00 - Labor and Demographic Economics - - General - - - General
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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