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Do Active Labor Market Policies Increase Employment?

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  • Mr. Marcello M. Estevão

Abstract

Using panel data for 15 industrial countries, active labor market policies (ALMPs) are shown to have raised employment rates in the business sector in the 1990s, after controlling for many institutions, country-specific effects, and economic variables. Among such policies, direct subsidies to job creation were the most effective. ALMPs also affected employment rates by reducing real wages below levels allowed by technological growth, changes in the unemployment rate, and institutional and other economic factors. However, part of this wage moderation may be linked to a composition effect because policies were targeted to low-paid individuals. Whether ALMPs are cost-effective from a budgetary perspective remains to be determined, but they are certainly not substitutes for comprehensive institutional reforms.

Suggested Citation

  • Mr. Marcello M. Estevão, 2003. "Do Active Labor Market Policies Increase Employment?," IMF Working Papers 2003/234, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2003/234
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    Cited by:

    1. 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.
    2. Riadh Ben Jelili, "undated". "The Arab Region's Unemployment Problem Revisited," API-Working Paper Series 1015, Arab Planning Institute - Kuwait, Information Center.
    3. Bukowski, Maciej & Lewandowski, Piotr & Koloch, Grzegorz & Baranowska, Anna & Magda, Iga & Szydlowski, Arkadiusz & Bober, Magda & Bieliński, Jacek & Zawistowski, Julian & Sarzalska, Malgorzata, 2008. "Employment in Poland 2007: Security on flexible labour market," MPRA Paper 14284, University Library of Munich, Germany.
    4. repec:ilo:ilowps:440180 is not listed on IDEAS
    5. Verónica Escudero, 2018. "Are active labour market policies effective in activating and integrating low-skilled individuals? An international comparison," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-26, December.
    6. Loughrey, Jason & Donnellan, Trevor & Hanrahan, Kevin & Hennessy, Thia, 2013. "Agricultural Labour Market Flexibility in the EU and Candidate Countries," Working papers 155707, Factor Markets, Centre for European Policy Studies.
    7. Rüdiger Wapler & Daniel Werner & Katja Wolf, 2018. "Active labour market policies in Germany: do regional labour markets benefit?," Applied Economics, Taylor & Francis Journals, vol. 50(51), pages 5561-5578, November.
    8. Estevão, Marcello & Nargis, Nigar, 2005. "Structural Labor Market Changes in France," IZA Discussion Papers 1621, Institute of Labor Economics (IZA).
    9. International Monetary Fund, 2005. "Israel: Selected Issues," IMF Staff Country Reports 2005/134, International Monetary Fund.
    10. Jha, Praveen K., 2009. "The well-being of labour in contemporary Indian economy : what's active labour market policy got to do with it?," ILO Working Papers 994401803402676, International Labour Organization.
    11. Tvrdon, Michal, 2007. "Labour Market Flexibility: the Case of Visegrad Countries," MPRA Paper 12314, University Library of Munich, Germany.
    12. Andrews Dan & Ferrari Irene & Saia Alessandro, 2019. "The Costs of Firm Exit and Labour Market Policies: New Evidence from Europe," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(1), pages 1-24, January.
    13. Mr. Marcello M. Estevão, 2005. "Product Market Regulation and the Benefits of Wage Moderation," IMF Working Papers 2005/191, International Monetary Fund.
    14. Wolff, Joachim & Nivorozhkin, Anton, 2012. "Give them a break! Did activation of young welfare recipients overshoot in Germany? (A regression discontinuity analysis)," VfS Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62046, Verein für Socialpolitik / German Economic Association.
    15. David C Maré, 2005. "Indirect Effects of Active Labour Market Policies," HEW 0509004, University Library of Munich, Germany.
    16. Mr. Marcello M. Estevão, 2004. "Why is Productivity Growth in the Euro Area so Sluggish?," IMF Working Papers 2004/200, International Monetary Fund.
    17. Miguel Baiao & Ilze Buligina, 2021. "Work Experience Led Programs and Employment Attainment," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 180-198.

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