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By: Martin Lundin (Uppsala University and IFAU) and Per Skedinger (IUI)

Decentralisation of active labour market policy: The case of Swedish local employment service committees. By: Martin Lundin (Uppsala University and IFAU) and Per Skedinger (IUI) Presented by: Michael Noyd. Active labour market programs (ALMPS).

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By: Martin Lundin (Uppsala University and IFAU) and Per Skedinger (IUI)

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  1. Decentralisation of active labour market policy: The case of Swedish local employment service committees By: Martin Lundin (Uppsala University and IFAU) and Per Skedinger (IUI) Presented by: Michael Noyd

  2. Active labour market programs (ALMPS) • Government programs designed to help unemployed find work • Main two local entities in Sweden that we’re responsible for this: • Local Employment Service Committees (ESC) • Public Employment Service Offices (PES) • Both programs are under the National Labour Market Board, which operates at the central government

  3. Goals of this working paper • Examine the effects of decentralizing decision-making among the agencies and programs • Can increase efficiency of the ALMPs • Could led to fiscal externalities through misallocation • Could create a migration reduction, which in turn to lead to geographical lock-in • Potential free-rider problems • Main example that the authors use is the 1996 Swedish pilot program

  4. The 1996 pilot program • Initiated on July 1, 1996 and included 25 municipalities • Program’s attempts was to gain more information about decentralization • Strengthened the ESCs by requiring the committees to have a majority members from municipal authorities, as well as the chairman • Participation was not randomized, but done through application • Lastly, it is important to note that this program affected only certain areas of the country

  5. The study and findings • Examined variables were geographical lock-in effects and the extent of decentralized decision-making • Looked at the first and second half of 1996 • Groups of the study: • 25 non-program municipalities of similar economic health to the 25 chosen • 13 municipalities that were accepted into the program but refused participation • And, of course, the 25 municipalities in the program

  6. The study and findings (cont.) • Used Econometrics to analyze the different groups • Both a triple-difference estimator, to use more information, and a double-difference estimator, to lead to more precision, were used • Analyzed the pre-existing economic conditions and found the program areas to be in similar standing to other areas • Took into account population, population change, unemployment rate, program rate, municipal employment rate, etc.

  7. The study and findings (cont.) • Results • No evidence of geographical lock-in effects due to the pilot program • Strong support suggests local initiatives (municipalities organizing ALMPs) increased in the program regions • Potential reason is, since municipalities were not randomly assigned or forced into the program, program is exogenous to the individuals who make the decisions • Other possible issues • Actual starting and ending (endogenous timing) • Short program duration • Too short for lock-in effects to appear

  8. Conclusion • In summary, the program caused: • No geographical lock-in effects in the short term • Decentralization spurred local initiatives, including outsiders • Final note • To their belief, first econometric study dealing with these issues. More research, they believe, is necessary to generalize their results

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