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Better together: Active and passive labor market policies in developed and developing economies

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  • Pignatti Clemente

    (International Labour Organization, Route des Morillons 4, 1211 Genève)

  • Van Belle Eva

    (Swiss Forum for Migration and Population Studies (SFM), Université de Neuchâtel, 2000 Neuchâtel, Switzerland)

Abstract

We investigate the macroeconomic impact of public expenditure in active labor market policies (ALMPs) and passive labor market policies (PLMPs) on main employment indicators (i.e., unemployment, employment, and labor force participation) for a large and novel panel database of 121 countries (36 developed, 64 emerging and 21 developing economies). Compared to previous studies, we include for the first time evidence from developing and emerging economies and explicitly examine the possible presence of complementarities between active and passive policies. We find that the interaction between interventions is crucial, as the effect of spending in either of the two policies is more favorable the more is spent on the other. Even the detrimental labor market effects of passive policies disappear on the condition that sufficient amounts are spent on active interventions. This complementarity seems even more important for emerging and developing economies.

Suggested Citation

  • Pignatti Clemente & Van Belle Eva, 2021. "Better together: Active and passive labor market policies in developed and developing economies," IZA Journal of Development and Migration, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 12(1), pages 1-27, January.
    • Handle: RePEc:vrs:izajdm:v:12:y:2021:i:1:p:27:n:9
    DOI: 10.2478/izajodm-2021-0009
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    2. Sergio Destefanis & Matteo Fragetta & Nazzareno Ruggiero, 2023. "Active and passive labour-market policies: the outlook from the Beveridge curve," Applied Economics, Taylor & Francis Journals, vol. 55(55), pages 6538-6550, November.
    3. Theodoropoulos, Nikolaos & Voucharas, Georgios, 2023. "Firm Closures and Labor Market Policies in Europe: Evidence from Retrospective Longitudinal Data," GLO Discussion Paper Series 1288, Global Labor Organization (GLO).
    4. Asya Bellia, 2021. "How do different policy combinations affect the labour market attachment of disabled individuals? A review of the literatur," Discussion Papers 2021/283, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    5. Antonia Asenjo & Verónica Escudero & Hannah Liepmann, 2024. "Why Should we Integrate Income and Employment Support? A Conceptual and Empirical Investigation," Journal of Development Studies, Taylor & Francis Journals, vol. 60(1), pages 1-29, January.
    6. Lucia Svabova & Katarina Kramarova, 2022. "Allowance for School Graduate Practice Performance in Slovakia: Impact Evaluation of the Intervention," Mathematics, MDPI, vol. 10(9), pages 1-27, April.
    7. Eleftherios Giovanis & Oznur Ozdamar, 2022. "Accommodating Employees with Impairments and Health Problems: The Role of Flexible Employment Schemes in Europe," Merits, MDPI, vol. 3(1), pages 1-26, December.
    8. Francesco Filippucci, 2022. "What Do NEETs Need? The Effect of Combining Activation Policies and Cash Transfers," PSE Working Papers halshs-03524083, HAL.

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    More about this item

    Keywords

    developing countries; evaluation; labor economics; public policy; welfare state;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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