Active Labour Market Policy Programmes Research Articles

Supporting the right workplace experience: a dynamic evaluation of three activation programmes for young job seekers in Slovakia

This paper investigates three alternative active labour market policy programmes available to young job seekers in Slovakia who were registered in 2011. All of the programmes facilitate gaining work experience and share a comparable design; however, they differ mainly in the collected workplace experience and the composition of participants. Using administrative data, we first explore the selection into each programme; second, we estimate the treatment effects on job seekers’ postparticipation absence from the registry of the unemployed. For this we argue that we have sufficiently rich data to control for selection into programs. We use a dynamic estimator and report the average treatment effects of participation in different periods between the sixth and fifteenth month after starting unemployment. For participation in earlier stages of unemployment, we confirm differences in the programmes impacts, with patterns described by previous literature; workplace experience collected in either the private sector or in a regular workplace appears to improve the chances of absence from registered unemployment of young job seekers relatively more than does participation in a public works type of programme. When compared later in the unemployment spell, the between-programme differences level out. Despite its ambivalent average impact, the public works type of programme positively impacts specific subgroups of participants.

Participation of Women in Institutionally Sponsored Entrepreneurship Programs in Serbia: Some Statistical Facts

The analysis of female entrepreneurship in Serbia is the main topic of this paper. The analysis of entrepreneurship takes into account the underrepresentation of women in the self-employed population. Studies analyzing entrepreneurial intention, self-efficacy, and self-perceived employability similarly show a lower representation of women choosing the professional path of entrepreneurs. Studies on institutional support for women who participate in entrepreneurship programs are rare. Therefore, determining how participation in institutionally sponsored active labor market policy programs influences the growth of female entrepreneurship in Serbia is the purpose of this paper. According to the results of this research, Serbia has a substantial gender difference in self-employment. Less than one third of business owners are women. Women made up almost half of those taking part in entrepreneurship training. In 2021 and 2022, they received more than half of all subsidies for entrepreneurs. However, these findings do not affect significantly the trend of self-employment in Serbia.

Individual need and societal claims: Challenging the understanding of universalism versus selectivism in social policy

AbstractIn this article, we argue that basic social policy concepts can fertilise the discussion on active labour market policy (ALMP). During the last decades, research on ALMP has become a flourishing field. This is an overall positive development. However, the development tends to fractionate the wider picture of social policy and distance the discussion from social policy seen as a multifold set of government measures that have a direct impact on the welfare of the citizens, by providing services and/or income. We analyse a local ALMP programme in the light of three classical social policy concepts: universalism, selectivism and need. To understand what is going on in ALMP programmes, we argue that it is as important to uncover claims made by the state as it is to satisfy the human needs most often presented as the objectives of ALMP programmes. We propose that the programme under study be characterised as a hybrid, combining elements frequently perceived as dichotomies in social policy literature. Selectivism and universalism are both present as principles and the programme consists of benefits in cash and in kind.

The Multi-Tool Nature of Active Labour Market Policy and its Implications for Partisan Politics in Advanced Democracies

Active labour market policy (ALMP) has emerged as a major topic of inquiry among comparative scholars in recent decades, alongside other social investments. However, few conclusive results have been produced regarding the political explanations of these policies, and not least the role of partisan politics. To help remedy this problem, this article proposes a new understanding of ALMP as a profoundly versatile set of ‘multi-purpose tools’ that policymakers across the political spectrum can use as a means to very different distributional ends. Specifically, it highlights how ALMP programmes vary in terms of 1) their target groups, 2) their intended labour market outcomes, and 3) their modes of production in politically salient ways. Informed by the new framework and by recent research, the article then develops a refined theory about how governments with different left–right placement, operating under economic and institutional constraints, affect ALMP development in different directions.

Accommodation or Extraction? Employers, the State, and the Joint Production of Active Labor Market Policy

Conventional wisdom among comparative political economists maintains that the participation of employers in policymaking and policy implementation, fostered by corporatist arrangements, is crucial to the successful expansion of active labor market policy (ALMP). This article introduces a transaction-oriented theory of corporatism, partisanship, and ALMP that challenges the dominant view. It argues that corporatist arrangements do not affect the overall scope of ALMP but facilitate particular types of ALMP programs, ones that require the joint participation of employers and the state and involve a transfer of public resources to employers. Corporatist arrangements facilitating such programs—which center-right parties tend to prefer over those produced unilaterally by the state—also shift the focus of partisan conflict over ALMP from the level of public expenditure to the structure. Evidence for these claims is provided by time-series cross-sectional analyses of twenty-one OECD countries since the mid-1980s.

Unemployment reduction or labor force expansion? How partisanship matters for the design of active labor market policy in Europe

AbstractComparative scholars fundamentally disagree about the impact of partisan politics in modern welfare states, particularly in certain ‘new’ policy areas such as active labor market policy (ALMP). Using new data on 900 ALMP programs across Europe, this study attempts to reconcile a long-standing dispute between the traditional ‘power resources’ approach and the ‘insider/outsider’ approach pioneered by Rueda. The study argues that both left-wing and right-wing governments invest in ALMP but that politics still matter because parties’ preferences regarding unemployment differ. The left is more inclined to expand programs primarily designed to reduce unemployment, which exclusively target ‘core’ groups in, or at risk of, unemployment, and programs in which participants are no longer counted among the unemployed. In contrast, both sides are equally prone to expand programs that also—or instead—target people who are not yet participating in the labor market, which thus also—or instead—serve to increase labor supply.

Sanctions and the exit from unemployment in two different benefit schemes

This paper investigates the effect of benefit sanctions on the exit rate from unemployment using a unique set of rich register data on unemployed Finnish individuals. The timing-of-events approach is applied to distinguish between the selection and causal effects of sanctioning. The results imply that the effect of sanctions differs according to the benefits received. Sanctions encourage unemployed individuals receiving flat-rate labour market support (LMS) to find jobs, whereas unemployed individuals receiving earnings-related (UI) allowances to leave the labour force. The encouraging effect of sanctions on active labour market policy programmes is relatively small and statistically significant only among LMS recipients.

A Performance Analysis of the Korean Financial Support Programs for Job Creation: Focused on the Service Delivery Systems of Active Labor Market Policy Programs

A Performance Analysis of the Korean Financial Support Programs for Job Creation: Focused on the Service Delivery Systems of Active Labor Market Policy Programs

Employment policies, hiring practices and firm performance

In this paper we investigate how active labor market policy programs affect firms' hiring strategies and, eventually, firms' performance. We focus on counseling and monitoring which may reduce search costs for employers, but which may also have ambiguous effect on the employer–employee matching quality and thus on firms' performance. Using a large scale experiment which was conducted in Denmark in 2005–2006 and induced a greater provision of activation, we find that small firms hiring in the districts where the social experiment was conducted changed their hiring practices in favor of unemployed workers and experienced greater turnover than other firms. Treated firms also experienced no change or a marginal reduction in value added and total factor productivity during the first years after the experiment. These results are consistent with the idea that monitoring creates compulsion effects which counteract the possible improvement in the matching process expected from job search assistance.

Employment Policies, Hiring Practices and Firm Performance

In this paper we investigate how active labour market policy programmes affect firms' hiring strategies and, eventually, firms' performance. We focus on counseling and monitoring which may reduce search costs for employers, but which may have ambiguous effect on the employer- employee matching quality and thus on firms' performance. Using a large scale experiment which was conducted in Denmark in 2005-2006 and induced a greater provision of activation, we find that small firms hiring in the districts where the social experiment was conducted changed their hiring practices in favor of unemployed workers and experienced greater turnover than the other firms. Treated firms also experienced no change or a marginal reduction in value added and total factor productivity during the first years after the experiment. These results are consistent with the idea that monitoring creates compulsion effects which counteract the possible improvement in the matching process expected from job search assistance.

Who are the lucky ones? Heterogeneity in active labour market policy outcomes

Nordlund M. Who are the lucky ones? Heterogeneity in active labour market policy outcomes Int J Soc Welfare 2011: 20: 144–155 © 2010 The Author(s), International Journal of Social Welfare © 2010 Blackwell Publishing Ltd and International Journal of Social Welfare. This study focuses on how the effects from investments in Active Labour Market Policy programmes (ALMPs) may be differently distributed due to the age and educational level of participants. Outcomes were measured as the chance of labour market inclusion, labour market stability and post-unemployment incomes. This longitudinal study captures long-term effects among 50,000 Swedes who entered unemployment in 1993. While the youngest gained most from ALMP-training, the oldest were best helped by ALMP- employment in reducing the risk of labour market exit. The lowest educated gained much from ALMP participation, although the effects were weaker than expected: those with a higher education gained more in terms of labour market stability from ALMP-training compared with the less educated persons. This result was interpreted in terms of a springboard effect, meaning that ALMP-training pushes higher educated people into further education in the regular educational arena.

What works best when? The role of active labour market policy programmes in different business cycles

Nordlund M. What works best when? The role of active labour market policy programmes in different business cyclesInt J Soc Welfare 2011: 20: 43–54 © 2009 The Author, Journal compilation © 2009 Blackwell Publishing Ltd and the International Journal of Social Welfare.At what point in a business cycle do long‐term unemployed persons gain most from participation in active labour market policy programmes (ALMP) as compared with openly unemployed persons? This article studies this question from the perspective of individual human capital with the hazard of labour market exit and chances of future labour market stability and equal post‐unemployment income as output variables. All the long‐term unemployed in Sweden were followed on a four‐year basis, with 1993 (recession) and 1999 (boom) as starting years. The study shows mainly positive effects among participants regardless of the state of the market. However, ALMP training has a ‘bridging’ effect over different labour market conditions, and a quick return to the regular labour market is, therefore, not as important for the success of participation as it is among ALMP employment participants.

Explaining the Employability Gap of Short‐Term and Long‐Term Unemployed Persons

SUMMARYEuropean countries provide a number of different active labor market policy programs to reduce the risk and the amount of long‐term unemployment. Programs focus on particular sets of barriers to employment, such as lack of motivation (via sanctions), lack of job search skills (via job search assistance), lack of experience (via wage subsidies), or lack of marketable skills (via training programs). Numerous studies have been conducted to analyze the effectiveness of these activities. The results clarify that a number of programs are not very successful in reaching the intended goals. The major reason may be that the available programs do not (or do not fully) meet the needs of the unemployed. In this paper, differences in the employability between short‐term and long‐term unemployed persons are studied in order to reveal the crucial factors of job‐finding chances. Analyzing the factors driving employment chances is a necessary step to shed light on the needs of job seekers and to derive recommendations for a (re‐)arrangement of active labor market policy according to those needs. The empirical analysis is based on unique survey data of short‐term and long‐term unemployed persons merged with administrative data for Germany, including usually unavailable information. The results highlight three significant and important findings. First, differences in formal skills could only explain a small part of the employability gap between short‐term and long‐term unemployed persons. Hence, providing courses that aim at increasing skills of the individuals (at least in Germany) may reduce the employment gap, but the scope is limited. Second, differences in obstacles to employment – in particular care obligations – are relevant. If long‐term unemployed persons were equal in characteristics to the short‐term unemployed, the employability gap between both groups would clearly be narrower. Third, differences in the state of health, and in particular limitations in working ability, largely account for the employment gap. For this reason, policy makers should pay more attention to the last two findings when designing the placement process. The set of active labor market programs should be revised addressing these aspects in order to increase the employability of the participants.

Active Labour Market Policy and Unemployment Scarring: A Ten-year Swedish Panel Study

AbstractPrevious studies have shown mixed results concerning the effects of participation in active labour market policy programmes (ALMPs) on the longer-term scars in the form of poor income development and low job stability following the end of an unemployment spell. Most previous studies, however, have been limited both in the time frame used and to particular programmes. We argue that human capital investments are long-term investments and should therefore also be investigated from a long-term perspective. ALMP training and ALMPs as subsidised employment also represent different types of human capital investments that may produce effects that are differently distributed over time. In order to handle these issues, this article uses a longitudinal register-based dataset in which all long-term (more than six months) unemployed Swedes in 1993, who had no labour market problems in 1992, were followed for ten years. We found positive effects of ALMP participation concerning both the probability of reaching pre-unemployment incomes and a reduction in the hazard of exiting the labour market, while the effect on the probability of having an unemployment-free year was mixed. The effects of the two forms of ALMPs were differently distributed over time, with ALMP employment having an immediate effect that decreased relatively quickly and ALMP training having a longer-term effect.

Turning Unemployment into Self‐Employment: Effectiveness of Two Start‐Up Programmes*

AbstractTurning unemployment into self‐employment has become a major focus of German active labour market policy (ALMP) in recent years. If effective, this would not only reduce Germany's persistently high unemployment rate, but also increase its notoriously low self‐employment rate. Empirical evidence on the effectiveness of such programmes is scarce. We evaluate the effectiveness of two start‐up programmes for the unemployed, where we include the probability of being employed, the probability of being unemployed and personal income as outcome variables. Our results show that at the end of the observation period, both programmes are effective. The considerable positive effects present a stark contrast to findings from evaluations of other German ALMP programmes in recent years. Hence, ALMP programmes aimed at moving the unemployed into self‐employment may prove to be among the most effective, both in Germany and elsewhere.

Explaining the Employability Gap of Short-Term and Long-Term Unemployed Persons

This paper analyzes the determinants of employability differences between short-term and long-term unemployed persons. Knowing these differences could help to address active labor market policy programs more adequately to the needs of the job-seekers in order to increase employment integration. Based on merged survey and register data differences in job finding chances of these groups are decomposed into a part due to differences in attributes and a part due to differences in valuing the attributes. The estimates clarify that current active labor market programs do not address important factors of employment. Particularly, health of the job seekers, limitations in the working ability and obstacles to employment comprising substance abuse, financial debts or care obligations for children or frail elderly play a significant role for successful placement. The conclusion is that policy makers should integrate these aspects in the placement process.

A Stock–Flow Matching Approach to Evaluation of Public Training Programme in a High Unemployment Environment

Abstract. Monthly panel (1998–2003) data from regional labour offices in Latvia are used to analyse the matching process in a high unemployment–low labour demand environment and to evaluate the impact of active labour market policy programmes on outflows from unemployment. Results suggest that the hiring process is driven by a stock–flow rather than by a traditional matching function: the stock of unemployed at the beginning of the month and flow of vacancies arriving during the month are the key determinants of outflows from unemployment to employment, whereas stock of vacancies and inflow of unemployed do not play any significant role. We find positive and significant effect of training programmes on outflows from unemployment to employment, thus providing strong evidence against cuts in training expenditures.

Turning Unemployment into Self-Employment: Effectiveness and Efficiency of Two Start-Up Programmes

Turning unemployment into self-employment has become a major focus of German active labour market policy (ALMP) in recent years. If effective, this would not only reduce Germany’s persistently high unemployment rate, but also increase its notoriously low self-employment rate. Empirical evidence on the effectiveness of such programmes is scarce. The contribution of the present paper is twofold: first, we evaluate the effectiveness of two start-up programmes for the unemployed. Our outcome variables include the probability of being employed, the probability of being unemployed, and personal income. Second, based on the results of this analysis, we conduct an efficiency analysis, i.e., we estimate whether the Federal Employment Agency has saved money by placing unemployed individuals in these programmes. Our results show that at the end of the observation period, both programmes are effective and one is also efficient. The considerable positive effects present a stark contrast to findings from evaluations of other German ALMP programmes in recent years. Hence, ALMP programmes aimed at moving the unemployed into self-employment may prove to be among the most effective, both in Germany and elsewhere.

Active labour market policy and employment flows

Analyses Polish active labour market policy programmes (ALMP) from a macroeconomic (regional) point of view. The effects of training programmes on the outflows from unemployment into employment and the effects of all ALMP programmes on the outflows from employment into unemployment (to identify displacement effects) are estimated. The empirical evidence gives no support to the view that public training programmes can be used to reduce unemployment, and there is no robust evidence for displacement effects by any ALMP programme. The result that start‐up loans can reduce flows from employment into unemployment is only weakly significant.

Estimating the Effects of Public Training on Polish Unemployment by Way of the Augmented Matching Function Approach

We analyse Polish active labour market policy (ALMP) training programmes from a macroeconomic (regional) point of view. The effects of training programmes on the outflows from unemployment and the effects of all ALMP programmes on the outflows from employment (to identify displacement effects) are estimated. The variety of specifications presented is revealing. In contrast to other studies on Poland, we show that it can make a difference to the estimates whether current ALMP expenditure is excluded from the set of regressors to reduce the endogeneity problem, whether lagged dependent variables are included to take account of the dynamics, and whether fixed or random effects models are estimated. The empirical evidence gives some tentative support to the view that public training programmes can be used to reduce unemployment.