Economics at your fingertips  

Active labour-market policies and output growth: Is there a causal relationship?

Eleftherios Goulas () and Athina Zervoyianni ()

Economic Modelling, 2018, vol. 73, issue C, 1-14

Abstract: While the labour-market impact of ALMP interventions has been extensively studied, an issue that has not been widely addressed in the literature is to what extent active labour-market policies have beneficial effects for the whole economy at the macroeconomic level. This paper addresses this issue by examining how additional resources allocated to active labour-market policies relate to output-growth rates. It also examines the sensitivity of the growth-ALMP relationship to the business cycle. Based on a structural model, we find that whether or not additional resources allocated to ALMPs contribute to raising output growth is a priori unclear. However, using data from OECD countries during 1991–2011 and GMM estimation to account for potential endogeneities, we find evidence suggesting a net positive output-growth differential due to implementing active labour-market policies in normal times of between 0.004 and 0.006 percentage point. This differential becomes larger during economic upturns when market conditions are improving relative to trend.

Keywords: Output growth; Labour-market policy; Cyclical influences (search for similar items in EconPapers)
JEL-codes: E60 E23 J08 E30 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Active labour-market policies and output growth - is there a causal relationship? (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.econmod.2017.11.019

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().

Page updated 2021-05-08
Handle: RePEc:eee:ecmode:v:73:y:2018:i:c:p:1-14