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Active labor market policies in the OECD and in selected transition economies

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  • Lehmann,Hartmut

Abstract

Transition economies have introduced a range of OECD active labor market policies to combat unemployment - albeit often on paper only, as with rising unemployment passive policies have crowded out active ones. But even in the Czech Republic, active labor market policies have contributed only marginally to reducing unemployment. One task for policymakers in Central and Eastern Europe must be to convey the message that, even under the best circumstances, active labor policies can play only a marginal role in reducing unemployment. OECD labor policies cannot be applied mechanically in Central and Eastern Europe because the situation there is different. Severe and persistent shortages in capital and managerial ability are sure to keep labor demand weak in the medium term, while labor supply will be abundant. As enterprises are restructured and liquidated, the newly unemployed workers cannot be absorbed by the weak private sector and must compete for scarce jobs. Women and older, less educated men have particular trouble finding work. Which active labor policies does the author suggest might be effective? Limited funds for active labor policies might best be spent retraining the most able unemployed workers to develop skills needed in the private sector. Public employment programs might be targeted especially to problem groups of workers and to the long-term unemployed - more for reasons of equity than of efficiency. The point is to have a clear idea whether both aims of efficiency and equity can be pursued and, if efficiency gains are unrealistic, whether equity considerations are politically indispensable. Because nontradable services are underdeveloped, Central and Eastern European countries might eliminate credit rationing that discourages self-employment (the self-employed have trouble getting financing). Improving consulting services for the unemployed in Hungary, Poland, and Russia makes more sense than applying a broad menu of OECD programs. The labor market in the Russian Federation appears to be more dynamic than in Hungary and Poland, but this is probably because of massive labor hoarding in Russian enterprises. Once they start shedding labor in earnest, their employment figures will look more like those in the other Central and Eastern European countries.

Suggested Citation

  • Lehmann,Hartmut, 1995. "Active labor market policies in the OECD and in selected transition economies," Policy Research Working Paper Series 1502, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1502
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    References listed on IDEAS

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    Cited by:

    1. Hujer, Reinhard & Zeiss, Christopher, 2005. "Vermittlungsgutscheine: Zwischenergebnisse der Begleitforschung 2004 : Teil 4: Makroökonomische Wirkungsanalyse," IAB-Forschungsbericht 200504, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Onaran, Özlem, 2007. "Jobless growth in the Central and Eastern European Countries. A country specific panel data analysis for the manufacturing industry," Department of Economics Working Paper Series 372, WU Vienna University of Economics and Business.
    3. Hartmut Lehmann & Jochen Kluve, 2010. "Assessing Active Labour Market Policies in Transition Economies," AIEL Series in Labour Economics,in: Floro Ernesto Caroleo & Francesco Pastore (ed.), The Labour Market Impact of the EU Enlargement. A New Regional Geography of Europe?, edition 1, chapter 11, pages 275-307 AIEL - Associazione Italiana Economisti del Lavoro.
    4. Özlem Onaran, 2008. "Jobless Growth in the Central and Eastern European Countries," Working Papers wp165, Political Economy Research Institute, University of Massachusetts at Amherst.
    5. Puhani, Patrick A. & Steiner, Viktor, 1996. "Public works for Poland? Active labour market policies during transition," ZEW Discussion Papers 96-01, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. Núria Rodríguez-Planas & Jacob Benus, 2007. "Evaluating Active Labor Markets in Romania," UFAE and IAE Working Papers 699.07, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    7. Puhani, Patrick A, 1999. "Public Training and Outflows from Unemployment: An Augmented Matching Function Approach on Polish Regional Data," CEPR Discussion Papers 2244, C.E.P.R. Discussion Papers.
    8. 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).
    9. Marek Gora & Grzegorz Kula & Magdalena Rokicka & Oleksandr Rohozynsky & Anna Ruzik, 2008. "Social Security, Labour Market and Restructuring: Current Situation and Expected Outcomes of Reforms," ESCIRRU Working Papers 5, DIW Berlin, German Institute for Economic Research.
    10. Urban Sila & Ricardo Sousa, 2014. "Windfall gains and labour supply: evidence from the European household panel," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-27, December.
    11. Joanna Tyrowicz & Tomasz Jeruzalski, 2013. "(In)Efficiency of matching: the case of a post-transition economy," Economic Change and Restructuring, Springer, vol. 46(2), pages 255-275, May.
    12. Jacqueline Mazza, 2000. "Unemployment Insurance: Case Studies and Lessons for Latin America and the Caribbean," IDB Publications (Working Papers) 1311, Inter-American Development Bank.
    13. Marek Góra & Oleksandr Rohozynsky, 2008. "Social Security Influence on Labor Mobility: Possible Opportunities and Challenges," ESCIRRU Working Papers 7, DIW Berlin, German Institute for Economic Research.
    14. Núria Rodríguez-Planas & Benus Jacob, 2010. "Evaluating active labor market programs in Romania," Empirical Economics, Springer, vol. 38(1), pages 65-84, February.
    15. Patrick Puhani & Viktor Steiner, 1997. "The Effectiveness and Efficiency of Active Labour Market Policies in Poland," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 24(3), pages 209-231, October.
    16. Puhani, Patrick A., 1999. "Estimating the effects of public training on Polish unemployment by way of the augmented matching function approach," ZEW Discussion Papers 99-38, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    17. Hagen, Tobias, 2003. "Three Approaches to the Evaluation of Active Labour Market Policy in East Germany Using Regional Data," ZEW Discussion Papers 03-27, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    18. Hujer, Reinhard & Zeiss, Christopher, 2003. "Macroeconomic Impacts of ALMP on the Matching Process in West Germany," IZA Discussion Papers 915, Institute for the Study of Labor (IZA).
    19. Nuria Rodriguez-Planas† & Jacob Benus, 2007. "Evaluative Active Labor Market Programmes in Romania," Working Papers 2007-31, FEDEA.
    20. Ruppert, Elizabeth, 1996. "Unemployment insurance in Algeria : implications for a labor market in transition," Policy Research Working Paper Series 1659, The World Bank.

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