Labor Market Policies and Unemployment in the Czech Republic

Abstract

We analyze the impact of the active labor market policies (ALMPs) and the unemployment compensation system (UCS) on unemployment durations of different groups in the Czech population by estimating hazard functions with new microeconomic data. We conclude that these programs were effective in improving the functioning of the labor market. The UCS system has allowed the unemployed to search for jobs but has not prolonged unduly unemployment spells. This analysis of the effectiveness of ALMPs on unemployment durations shows that job brokering shortened spells of the groups that tended to have longer unemployment durations, i.e., women, Romanies, the handicapped, less educated persons, and those with an unemployment history. Our results suggest that the UCS and the ALMPs increased the social acceptability of the painful economic transition.J. Comp. Econom.,March 1999, 27(1), pp. 33–60. William Davidson Institute, University of Michigan Business School, 701 Tappan Street, Ann Arbor, Michigan 48109-1234; and CERGE-EI, 11121 Prague 1, Czech Republic.