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Active labour-market policies and output growth - is there a causal relationship?

Listed author(s):
  • Eleftherios Goulas

    ()

    (Department of Law & Finance, Bedfordshire University, UK)

  • Athina Zervoyianni

    ()

    (Department of Economics, University of Patras, Greece; The Rimini Centre for Economic Analysis)

While the labour-market impact of ALMP interventions has been extensively studied, an issue that has not been widely addressed in the literature is to what extent active labour-market policies have beneficial effects for the whole economy at the macroeconomic level. This paper addresses this issue by examining how additional resources allocated to active labour-market policies relate to output-growth rates. It also examines the sensitivity of the growth-ALMP relationship to the economy's business-cycle position and the state of market expectations. Using data from OECD countries during 1991-2011, we find evidence of a positive output-growth differential due to implementing active labour-market policies in normal times of between 0.004 and 0.005 percentage point. This differential becomes larger during economic upturns and when market expectations are optimistic. These results are obtained after controlling for other standard, direct and indirect, influences on output-growth rates and after addressing the issue of potential endogeneities.

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File URL: http://www.rcea.org/RePEc/pdf/wp17-20.pdf
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Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 17-20.

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Date of creation: Jul 2017
Handle: RePEc:rim:rimwps:17-20
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  1. Escudero, Veronica, 2014. "Are active labour market policies effective in activating and integrating low-skilled individuals? An international comparison," MPRA Paper 55319, University Library of Munich, Germany.
  2. Marc Ferracci & Gr�gory Jolivet & Gerard J. van den Berg, 2014. "Evidence of Treatment Spillovers Within Markets," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 812-823, December.
  3. Bertola, Giuseppe & Blau, Francine D & Kahn, Lawrence, 2001. "Comparative Analysis of Labour Market Outcomes: Lessons for the US from International Long-Run Evidence," CEPR Discussion Papers 3023, C.E.P.R. Discussion Papers.
  4. repec:ilo:ilowps:487304 is not listed on IDEAS
  5. Hujer, Reinhard & Zeiss, Christopher, 2006. "Macroeconomic Effects of Short-Term Training Measures on the Matching Process in Western Germany," IZA Discussion Papers 2489, Institute for the Study of Labor (IZA).
  6. Christopher J. Erceg & Andrew T. Levin, 2014. "Labor Force Participation and Monetary Policy in the Wake of the Great Recession," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 46(S2), pages 3-49, October.
  7. Andrea Bassanini & Stefano Scarpetta, 2003. "The Driving Forces of Economic Growth: Panel Data Evidence for the OECD Countries," OECD Economic Studies, OECD Publishing, vol. 2001(2), pages 9-56.
  8. Michael Rosholm & Lars Skipper, 2009. "Is labour market training a curse for the unemployed? Evidence from a social experiment," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(2), pages 338-365, 03.
  9. John Martin, 2015. "Activation and active labour market policies in OECD countries: stylised facts and evidence on their effectiveness," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-29, December.
  10. José María ARRANZ & Carlos GARCÍA SERRANO & Virginia HERNANZ, 2013. "Active labour market policies in Spain: A macroeconomic evaluation," International Labour Review, International Labour Organization, vol. 152(2), pages 327-348, 06.
  11. Cahuc, Pierre & Le Barbanchon, Thomas, 2010. "Labor market policy evaluation in equilibrium: Some lessons of the job search and matching model," Labour Economics, Elsevier, vol. 17(1), pages 196-205, January.
  12. Romain Bouis & Orsetta Causa & Lilas Demmou & Romain Duval & Aleksandra Zdzienicka, 2012. "The Short-Term Effects of Structural Reforms: An Empirical Analysis," OECD Economics Department Working Papers 949, OECD Publishing.
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