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Active labour market policies: an introduction

Active labour market policies: an introduction. Giuliano Bonoli. Active labour market policies. 1. The ‘activation turn’ in social policies 2. How do ALMP work? 3. The instruments and their effectiveness 4. Employer’s involvement. The ‘activation turn’ in social policies.

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Active labour market policies: an introduction

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  1. Active labour market policies: an introduction Giuliano Bonoli

  2. Active labour market policies 1. The ‘activation turn’ in social policies 2. How do ALMP work? 3. The instruments and their effectiveness 4. Employer’s involvement

  3. The ‘activation turn’ in social policies • Non employment is increasingly considered as problematic: • Unemployed people • Social assistance recipients • Invalidity benefit recipients • Older persons • housepersons • Lone parents

  4. What can we do with active labour market policies? • ALMPs reduce obstacles to employment for given categories of non working people • They cannot create new jobs, but can facilitate job creation by stimulating the supply of labour • Can be effective against `jobless growth’

  5. Welfare recipients and employment in the US

  6. Unemployment rate change (1993-2001) and spending on ALMP Source: OECD Employment Outlook, 2005, OECD SOCX 2004

  7. 2. How can activation work: eight different effects • The sorting effect. Assigning a measure to a jobseeker may reveal that he or she is not in the appropriate scheme • The deterrence effect. Assigning a measure to a jobseeker who has access to employment may push him or her to accept an offer

  8. Activation can produce different effects 3. The motivation effect. Participation in a programme may have a positive emotional impact on a jobseeker 4. The (financial)incentive effect. Positive incentives and sanctions related to labour market entry may impact on jobseekers behaviour 5. The qualification effect. Activation can improve the qualifications of jobseekers (professional, social, personal level)

  9. Activation can produce different effects 6. The contact effect. Participation in programme may increase the number of persons a jobseeker get in contact with, increasing his or her chances of finding a job. 7. The de-stigmatisation effect. Adequate measures may reduce the consequences of stigma by way of actually meeting the unemployed. 8. The lock-in effect. Participation in a programme may reduce the likelihood of labour market entry during the programme

  10. Possible problems • Dead-weight effects: people who would have found a job anyway • Substitutions effects: improved job prospects for the target group mean less chances for other job seekers • Displacement effects: job losses elsewhere in the economy • Disconnection: recipents are moved off benefit but not necessarly in employment

  11. 3. The tools of active labour market policy • Assistance/counseling • Negative incentives • Positive incentives • Human capital improvements • The most effective systems combine measures on the three levels

  12. Assistence /counselling • Positively evaluated. Important. • Can improve the effectiveness of other measures • Tendency: individual case worker • Example: the « Better off calculations » in the UK

  13. Job search • Improving job search skills • Assistance in finding vacancies • Job clubs

  14. Financial incentives • Income disregard • Tax credits • Positively evaluated, but: • Incentive must be strong • Difficulties with job retention • Example: « Working tax credit » in the UK

  15. Training • Results are not always encouragning • Contradictory results for men • In general, little impact for younger people • Effective for women reentering the labour market after a break.

  16. Conditions for successful training programmes • Precisely targeted on selected groups • Small in size • Lead to qualifications that are recognised by the market • Include an ‘on the job’ component Source: Martin, Grubb 2001

  17. Employment subsidies • In general, positive evaluation • Risk of substitution and dead-weight effects • Important to involve employers

  18. Sanctions Source: OECD, Employment Outlook 2000, Paris, 2000

  19. What works? Meta-evaluation of 52 programmes in the USA. Impact on earnings. Source: Greenberg et al. 2005

  20. 4. What role for employers? • Study of employer’s participation in ALMPs in Denmark and in the UK • In general, collaboration has workerd better in Denmark. Employers are better organised • Study is based on a survey among employers

  21. Reasons given by employers who have participated to one or more programmes Source: Martin, C. J. « Employers and the implementation of active social policy », World Politics, 57, October 2004

  22. Reasons given by employers who did not participate to the programmes Source: Martin, C. J. « Employers and the implementation of active social policy », World Politics, 57, October 2004

  23. Some recommendations based on the academic litterature • Combine actions on different levels, exploiting different effects • Favour measures that facilitate employment in the primary job market • It is important to have employers on board • Adapt actions to target groups • Make sufficient resources available • Develop a reliable evaluation scheme

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