Do Active Labor Market Policies Increase Employment?

December 1, 2003

Preview Citation

Format: Chicago

Marcello M. Estevão Do Active Labor Market Policies Increase Employment?, (USA: International Monetary Fund, 2003) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Active labor market policies, Employment, Employment rate, Labor, Labor market policy, Wages

Keywords: Active labor market policies, ALMP expenditure, ALMPs Affect Employment, Bargaining, Creation effect, Effect of ALMPs, Employment, Employment creation, Employment protection index change sign, Employment protection law, Employment rate, Employment rate specification, Europe, Expenditure, Expenditures in labor market policy, Job-search efficiency, Label of active labor market policies, Labor market policies, Labor market policy, Labour market, Labour market training, Replacement rate, Unemployment, Wages, WP

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/234
Stock No:

WPIEA2342003
ISBN:

9781451875645
ISSN:

1018-5941

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