Macroeconometric evaluation of active labour market policies in Germany : a dynamic panel approach using regional data

Most evaluation studies of active labour market policies (ALMP) focus on the microeconometric evaluation approach using individual data. However, as the microeconometric approach usually ignores impacts on the non-participants, it should be seen as a first step to a complete evaluation which has to be followed by an analysis on the macroeconomic level. As a starting point for our analysis we discuss the effects of ALMP in a theoretical labour market framework augmented by ALMP. We estimate the impacts of ALMP in Germany for the time period 1999-2001 with regional data of 175 labour office districts. Due to the high persistence of German labour market data the application of a dynamic model is crucial. Furthermore our analysis accounts especially for the inherent simultaneity problem of ALMP. For West Germany we find positive effects of vocational training and job creation schemes on the labour market situation, whereas the results for East Germany do not allow profound statements. JEL Classification: C33, E24, H43, J64, J68

From Employment to Employability: the Role of Active Labor Market Policies in Croatia

High unemployment represents striking economic failures that are costly not only to individuals directly affected, but also to the economy and society as a whole. Measures of Active Labor Market Policy (ALMP) - such as training, wage subsidies, public employment measures, and job search assistance - are widely used in European countries to combat unemployment. Croatia, as an EU candidate country, also has a long tradition in ALMP since rising employment is continuously at the top of the Government policy agenda targeting at economic growth and development. The purpose of this paper is to present ALMP and their role in combating the unemployment. Particular attention will be given to the ALPM of the EU and its implications for Croatia as a candidate country. The paper is organized as follows. After introductory remarks, the section 2 provides a theoretical background on the ALMP and relevant measures and discusses the ALMP in the EU Section 3 presents the ALMP in Croatia and discusses its status and perspective. The paper concludes with the section 4, suggesting further research focus, as well as some policy suggestions.employability, active labor market policy and measures, EU, Croatia

Subsidized Jobs for Unemployed Workers in Slovakia

This paper uses an administrative dataset from the Slovak Republic on durations of individual unemployment spells. The focus of the analysis is on the effect of the duration of temporary subsidized jobs on the job finding rate of unemployed workers. It appears that the duration of the temporary jobs is an important determinant of the speed by which unemployed workers find regular jobs. In this sense shorter temporary jobs are more effective than long temporary jobs. The main reason for this is probably that temporary jobs with a long duration induce workers in the first period on the temporary job to search less intensive for a regular job than temporary jobs with a short duration do.http://deepblue.lib.umich.edu/bitstream/2027.42/39695/3/wp311.pd

Political Cycles in Active Labor Market Policies

This paper examines how electoral motives and government ideology influence active labor market policies (ALMP). We present a model that explains how politicians strategically use ALMP to generate political cycles in unemployment and the budget deficit. Election-motivated politicians increase ALMP spending before elections irrespective of their party ideology. Leftwing politicians spend more on ALMP than rightwing politicians. We test the hypotheses derived from our model using German state data from 1985:1 to 2004:11. The results suggest that ALMP (job-creation schemes) were pushed before elections.active labor market policies, political cycles, labor market expenditures, opportunistic politicians, partisan politicians

Identifying effect heterogeneity to improve the effiency of job creation schemes in Germany?

Previous empirical studies of job creation schemes in Germany have shown that the average effects for the participating individuals are negative. However, we find that this is not true for all strata of the population. Identifying individual characteristics that are responsible for the effect heterogeneity and using this information for a better allocation of individuals therefore bears some scope for improving programme efficiency. We present several stratification strategies and discuss the occurring effect heterogeneity. Our findings show that job creation schemes do neither harm nor improve the labour market chances for most of the groups. Exceptions are long-term unemployed men in West and long-term unemployed women in East and West Germany who benefit from participation in terms of higher employment rates. JEL: C13 , J68 , H4

Macroeconomic impacts of ALMP on the matching process in West Germany

This paper investigates the macroeconomic effects of job creation schemes and vocational training on the matching processes in West Germany. The empirical analysis is based on regional data for local employment office districts for the period from 1999 to 2003. The empirical model relies on a dynamic version of a matching function augmented by ALMP. In order to obtain consistent estimates in the presence of a dynamic panel data model, a first-differences GMM estimator and a transformed maximum likelihood estimator are applied. Furthermore the paper considers the endogeneity problem of the policy measures. The results obtained from our estimates indicate that vocational training does not significantly affect the matching process and that job creation schemes have a negative effect. JEL Classification: C23, E24, H43, J64, J6

Feelings of dual-insecurity among European workers: A multi-level analysis

This article analyses European Social Survey data for 22 countries. We assess the relationship between feelings of employment and income insecurity (dual-insecurity) among workers and national flexicurity policies in the areas of lifelong learning, active labour market policy, modern social security systems and flexible and reliable contractual arrangements. We find that dual-insecurity feelings are lower in countries that score better on most flexicurity polices, but these effects are in all cases outweighed by levels of GDP per capita. Thus feelings of insecurity are reduced more by the affluence of a country than by its social policies. However, affluence is strongly correlated with the policy efforts designed to reduce insecurity, especially active labour market policies and life-long learning, two policy areas that are threatened with cuts as a result of austerity

Evaluating the Dynamic Effects of Active Labour Policies in Italy

This paper analyses whether active labour market programmes (ALMP) have differing effects on unemployment and employment dynamics according to the particular region in which they are implemented. To this end, it analyses alternative theoretical and econometric models thought to capture the possible effects of active labour market policies on labour force dynamics. The econometric methodologies implemented are the generalized method of moment (GMM) and the panel vector autoregression (P-VAR). The evidence yielded by the GMM models suggests that the effects of different ALMP on unemployment are dissimilar across the Italian regions. It follows that some active programmes are likely to have a greater effect in the South than in the North. The results of the P-VAR models estimated are synthesised by impulse response analysis and forecast error variance decomposition. The impulse response analysis suggests that an increase in total ALMP gives rise to (i) a decrease in the unemployment rate and (ii) a significant increase in labour force participation. More interestingly, the results obtained from the error variance decomposition analysis show that unemployment movements are not driven by shocks in the ALMP and that, especially in the northern regions, atypical contracts shocks account for a substantial portion of unemployment dynamics.ALMP, GMM, P-VAR

Would active labor market policies help combat high U.S. unemployment?

Two years after the end of the 2007-09 recession, the unemployment rate in the United States remains above 9 percent - roughly double its pre-recession level. ; Nie and Struby analyze the cyclical and structural components of this elevated level of unemployment, active and passive labor market policies, and how the policies are utilized in the United States and 20 Organization for Economic Cooperation Development countries. ; The analysis finds that two active programs can be particularly effective: training programs that equip unemployed workers with skills that are in demand and job-search assistance that matches unemployed workers with employers. These findings - together with evidence that the U.S. labor market currently suffers from a certain amount of structural unemployment - suggest that the United States could benefit from more training programs and job-search assistance.