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On the New Methodology of Cost‐Benefit Analysis of ALMP – The Case of Serbia

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  • Zubović, Jovan
  • Simeunović, Ivana

Abstract

Active labour market policies are commonly used tool to fight unemployment. In the late 1970s in most developed countries of OECD government expenditures on those policies reached up to 1.5% of GDP. This created a need to evaluate the impact of such measures and perform cost‐benefit analyses. Evaluations have in the previous 30 years been undertaken by using several methods: experimental and quasi‐experimental, measurements and evaluations of processes performance, micro and macro analyses. In this paper we have presented and tested a modified approach of cost‐benefit analysis of ALMP viewed as an investment made by a government. The goal was to determine whether by using such an approach it is possible to provide new information to policy makers and to deepen research and further develop a methodology which will be robust enough to serve as a proof of ALMP effectiveness. Initial results of the empirical research in Serbia show very positive results, indicating that especially in the period of recessions, active measures can significantly improve labour market conditions, thus create high levels of return to investments (taking ALMP as an investment). Using aggregate data on all persons being registered as unemployed at the beginning of 2008 and 2009, we have tested how the ALMP impact the potential growth of tax returns. Our findings say that in 2008 there has been a net gain of € 269 million and in 2009 € 166 million in tax returns collected.

Suggested Citation

  • Zubović, Jovan & Simeunović, Ivana, 2012. "On the New Methodology of Cost‐Benefit Analysis of ALMP – The Case of Serbia," MPRA Paper 42532, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:42532
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    File URL: https://mpra.ub.uni-muenchen.de/42532/1/MPRA_paper_42532.pdf
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    References listed on IDEAS

    as
    1. Calmfors, Lars & Forslund, Anders & Hemström, Maria, 2002. "Does Active Labour Market Policy Work? Lessons from the Swedish Experiences," Seminar Papers 700, Stockholm University, Institute for International Economic Studies.
    2. Robinson, Peter, 2000. "Active Labour-Market Policies: A Case of Evidence-Based Policy-Making?," Oxford Review of Economic Policy, Oxford University Press, vol. 16(1), pages 13-26, Spring.
    3. Tatiana Mosteanu & Mihaela Iacob, 2008. "Theories And Approaches Regarding The Cost – Benefit Analysis Role And Principles," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 11(11(528)(s), pages 7-13, November.
    4. Reinhard Hujer & Uwe Blien & Marco Caliendo & Christopher Zeiss, 2006. "Macroeconometric Evaluation of Active Labour Market Policies in Germany. A Dynamic Panel Approach Using Regional Data," AIEL Series in Labour Economics,in: Floro Ernesto Caroleo & Sergio Destefanis (ed.), The European Labour Market. Regional Dimensions, edition 1, chapter 14, pages 287-309 AIEL - Associazione Italiana Economisti del Lavoro.
    5. Holger Bonin & Ulf Rinne, 2014. "‘Beautiful Serbia’ - objective and subjective outcomes of active labour market policy in a transition economy," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 22(1), pages 43-67, January.
    6. Martin Neil Baily & James Tobin, 1977. "Macroeconomic Effects of Selective Public Employment and Wage Subsidies," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 8(2), pages 511-544.
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    More about this item

    Keywords

    Active policies; evaluation; unemployment;

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

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