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The impact of active labour market policies : an AGE analysis for The Netherlands

Author

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  • Jongen, Egbert L. W.

    (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics)

  • Gameren, Edwin van
  • Graafland, Johan J.

Abstract

We study the impact of active labour market policies (ALMPs) in the context of an applied general equilibrium model for the Dutch labour market. By using a calibrated general equilibrium model we try to narrow down the possible range of the net effect of various ALMPs. We consider the impact of publicly provided relief and training programs, and subsidies in the private sector for low-productive workers (‘vouchers’) on the steady state of the labour market (the ‘long-run’). Our findings are: 1. Relief jobs reduce unemployment and increase production in the public sector. How-ever, higher wage and search costs crowd out private sector employment and production. Overall production falls. 2. Training programs reduce unemployment more than relief jobs. Individuals that par-ticipate in training programs (re-)gain (lost) skills. In this way training programs speed up the process by which workers move into private sector employment. Search costs for firms fall. However, additional wage pressure leaves a negative net effect on private sector employment. Production is hardly affected though, due to the training effect on average labour productivity. 3. Vouchers for low-productive workers reduce labour costs and hence increase private sector employment and production. Unemployment falls by less than under the relief

Suggested Citation

  • Jongen, Egbert L. W. & Gameren, Edwin van & Graafland, Johan J., 2000. "The impact of active labour market policies : an AGE analysis for The Netherlands," Serie Research Memoranda 0017, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    • Handle: RePEc:vua:wpaper:2000-17
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    References listed on IDEAS

    as
    1. Devine, Theresa J. & Kiefer, Nicolas M., 1991. "Empirical Labor Economics: The Search Approach," OUP Catalogue, Oxford University Press, number 9780195059366.
    2. Bovenberg, A. Lans & Graafland, Johan J. & de Mooij, Ruud A., 2000. "Tax reform and the Dutch labor market: an applied general equilibrium approach," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 193-214, October.
    3. Broersma, L., 1996. "Job searchers, job matches and the elasticity of matching ob searchers," Serie Research Memoranda 0004, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
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    1. repec:dgr:rugsom:03c28 is not listed on IDEAS
    2. Delsen, Lei, 2003. "Are European welfare states sustainable?," Research Report 03C28, University of Groningen, Research Institute SOM (Systems, Organisations and Management).

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    More about this item

    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
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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