Learning from Transition Economies: Assessing Labor Market Policies across Central and Eastern Europe

Abstract

Central and Eastern European countries transformedradicallytheir unemployment benefit systems and altered significantly the composition of their active labor market policy budgets in the transition process. Their recent experience is valuable from an OECD country perspective. Based on a rich data base of district-level outflows from registered unemployment and active labor market policy expenditures and intakes, this paper provides a preliminary assessment of the effectiveness of active labor market policies in Central and Eastern Europe. Estimates of an augmented matching function do not point to significant deadweight losses associated with active program intakes. This does not rule out the possibility that active policies displace those already employed, but such substitution effects may not be undesirable given the stagnancy of the unemployment pools in these countries.J. Comp. Econom.,December 1997,25(3), pp. 366–384. Università Bocconi and IGIER, Istituto di Economia Politica, via Sarfatti, 25, 20136 Milan, Italy.