Using panel data for 15 industrial countries, active labor market policies (ALMPs) are shown to have raised employment rates in the business sector in the 1990s, after controlling for many institutions, country-specific effects, and economic variables. Among such policies, direct subsidies to job creation were the most effective. ALMPs also affected employment rates by reducing real wages below levels allowed by technological growth, changes in the unemployment rate, and institutional and other economic factors. However, part of this wage moderation may be linked to a composition effect because policies were targeted to low-paid individuals. Whether ALMPs are cost-effective from a budgetary perspective remains to be determined, but they are certainly not substitutes for comprehensive institutional reforms.
, ExpenditureinLaborMarketPolicies Database, and Benefits and Taxes Database; some institutional variables from Nickell and Nunziata (2001) and Debrun (2003); author’s estimations.
Notes: 1) Countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Netherlands, Norway, New Zealand, Spain, Sweden, UK and USA.
2) t-statistics in parentheses. Bold figures are significant at least at a 5 percent level.
1 Expendituresinlabormarketpolicies expressed as a share of GDP in the relevant fiscal year.
Various specifications of the
Sources; OECD - Analytical Database, ExpenditureinLaborMarketPolicies Database, and Benefits and Taxes Database; some institutional variables from Nickell and Nunziata (2001) and Debrun (2003) ; author’s estimations.
Notes: 1) Countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Netherlands, Norway, New Zealand. Spain, Sweden, UK and USA. 2) t-statistics in parentheses. Bold figures are significant at least at a 5 percent level.
Time and country dummies
Number of observations
Adjusted R 2
Sources: Organization for Economic Cooperation and Development (OECD), Analytical database, ExpenditureinLaborMarketPolicies database, and Benefits and Taxes database; some institutional variables from Nickell and Nunziata (2001
This Selected Issues paper first explains the recent increase in trend growth and then discusses how labor market and tax policies could best sustain it. This study calculates French trend growth estimating simultaneously a Cobb–Douglas production technology and total factor productivity. The main conclusion is that French trend growth indeed increased during the second half of the 1990s to an average annual rate of 2.1 percent, from 1.8 percent in 1993. This was not owing to a recovery of total factor productivity growth.
search and matching model ( Pissarides, 2000 ), the incidence of LTU and labor market matching efficiency are negatively correlated with the correlation of -0.37. Furthermore, the incidence of LTU is also positively correlated with youth not in employment, education, or training (NEET). Finally, there is a negative relationship between the incidence of LTU and expendituresinlabormarketpolicies.
20. The incidence of LTU is persistent and negatively associated with GDP growth ( Table 2 ) . The incidence of LTU is
This is the first issue of IMF Staff Papers published under a special partnership between the IMF and Palgrave Macmillan. Very little will change with regard to the journal's visual appearance, though significant service quality enhancements (e.g., an on-line interactive edition) will rollout before the end of 2007. For more information and regular updates, please access http://www.palgrave-journals.com/imfsp/index.html.
While unemployment rates in Europe declined after the global financial crisis until 2018/19, the incidence of long-term unemployment, the share of people who have been unemployed for more than one year to the total unemployed, remained high. Moreover, the COVID-19 pandemic could aggravate the long-term unemployment. This paper explores factors associated with long-term unemployment in European countries, using panel of 25 European countries over the period 2000–18. We find that skill mismatches, labor market matching efficiency, and labor market policies are associated with the incidence of long-term unemployment. Among different types of active labor market policies, training and start-up incentives are found to be effective in reducing long-term unemployment.