MULTI†CRITERIA OPTIMIZATION OF REGIONAL EMPLOYMENT POLICY: A SIMULATION ANALYSIS FOR GERMANY

Andranik Tangian

Review of Urban & Regional Development Studies, 2008, vol. 20, issue 2, 103-122

Abstract: The distribution of European and national aid among 271 German labor market regions is considered as an optimization problem with three targets: (i) interregional equalization of unemployment rates; (ii) minimization of total (national) unemployment; and (iii) maximization of GDP, subject to budget constraints and some administrative restrictions. The analysis of the German program in 2000–2002 shows that the results actually obtained for 6 billion euro required only 241 million euro under optimal planning (4% of the actual budget). Such an inappropriate implementation of active labor market policies can be the cause of low efficiency, often misinterpreted as uselessness. This paper suggests a decision aid for optimal planning and shows that tax returns from the additional GDP due to jobs subsidized can transform regional policy into a winning governmental strategy.

Date: 2008
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https://doi.org/10.1111/j.1467-940X.2008.00144.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:revurb:v:20:y:2008:i:2:p:103-122

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