France, for example, would need to raise its expenditure per unemployed individual—relative to its 2010 expenditure—by over 65 and 640%, respectively, in training and start-up incentives if the country is to attain the necessary levels for these policies to be the most effective.

https://doi.org/10.1111/sjoe.12214, International Labour Organization (ILO) (2016) What works: active labour market policies in Latin America and the Caribbean. This paper aims to contribute to this debate by examining the effectiveness of active labour market policies (ALMPs) in improving labour market outcomes, especially for low-skilled individuals from a macroeconomic perspective.

https://doi.org/10.1111/j.1467-9914.1993.tb00195.x, Hijzen A, Martin S (2013) The role of short-time work schemes during the global financial crisis and early recovery: a cross-country analysis. This paper examines the effectiveness of active labour market policies (ALMPs) in improving labour market outcomes, especially of low-skilled individuals, by means of a pooled cross-country and time series database for 31 advanced countries during the period 1985–2010.

The result of these changes has been a major reduction in the government's participation and expenditure in active labour market programs and policies. Definition: Active labour market programmes includes all social expenditure (other than education) which is aimed at the improvement of the beneficiaries’ prospect of finding gainful employment or to otherwise increase their earnings capacity.

Google Scholar, Algan Y, Cahuc P, Zylberberg A (2002) Public employment and labour market performance. Interestingly, this paper finds that while the variable PES allocation only affects the unemployment rate of the overall population directly, it has a significantly negative effect for the unemployment rate of the low-skilled group through its interaction with training.

This first dimension is measured by the overall expenditure on programme administrationFootnote 11 as a percentage of total expenditure in ALMPs; (ii) continuity in the implementation of programmes is also expected to matter since large fluctuations in public spending (i.e. Following the same logic, this same country would need to spend around US$6,200 (PPP) in the policy cluster and US$3,600 (PPP) in start-up incentives for every fewer unemployed. Naturally, coefficients mean different things for countries depending on not only their level of unemployment but also their level of expenditure in each of the policies.

Changing the sample does not seem to alter the big lines of the estimation results systematically for any group of countries. Center for Global Development, Washington DC, Scarpetta S (1996) Assessing the role of labour market policies and institutional settings on unemployment: a cross-country study. This effect is, however, not confirmed by the cycle-timing interaction, which in the case of the employment rate is not significant for either population group. I find that ALMPs matter at the aggregate level but mostly through appropriate implementation aspects.

https://doi.org/10.2307/2235020, Card D (2001) Estimating the return to schooling: progress on some persistent econometric problems. This finding is in line with results from micro-econometric analyses showing that start-up incentives are associated with a ‘double dividend’ if subsidized firms create more jobs in the future (Caliendo and Künn 2014). Since the 1990s, there has been increased recognition of the need for ALMPs, and today, these policies are widely regarded as an important tool in fighting unemployment.

including both on the efficiency of the matching process and on the size of the labour force) is of upmost importance.

Including, Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zeeland, Norway, Poland, Portugal Slovak Republic, Slovenia, Spain, Sweden, Switzerland, the UK and the USA.

In fact, a well-established microeconomic literature exists today on the effects of these policies and their design and delivery systems at the individual level (Card et al.

PES and administration represented close to 30% of total expenditure in ALMPs in 2010. Moreover, these policies are effective in raising participation, but only for the low skilled. For example, an increase by one percentage point in the allocation of resources to programme administration would be associated with a decrease of 0.1 percentage points in the overall unemployment rate, and an increase by around 0.1 and 0.2 percentage points in the low-skilled employment rate and LFPR, respectively.

While the former solution assumes a policy stance that is not a correct representation of reality (at least not in the panel of countries used for this study, as discussed above), the latter eliminates the time varying property of the policy variables as a source of identification, something that is particularly worrying in this analysis giving the long period studied.

The main goal of active labour market policies (ALMPs) is to increase the employment opportunities for jobseekers and to improve matching between jobs (vacancies) and workers (i.e.

Murtin and de Serres 2014; Blanchard and Wolfers 2000; Scarpetta 1996). Training, in contrast, seems to be effective mostly for the overall population; however, it has also positive effects for the low skilled through the interaction with implementation variables. Third, the window of time was also modified to assess whether results remained consistent when studying only the last decade.Footnote 29 Results seem to hold, with the exception of the implementation variables timing and the interactions of the allocation of resources to programme administration with the policy variables that become highly significant for the unemployment rate. Although using GDP or output gap is most common, one can expect that these covariates will be highly correlated with both labour market variables and policy variables.

The contrary occurs with the variable timing (i.e.

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