Labor Market Programs, the Discouraged-Worker Effect, and Labor Force Participation
Kerstin Johansson ()
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Kerstin Johansson: Institute for Labour Market Policy Evaluation, Postal: P.O. Box 513, SE-751 20 Uppsala, Sweden
No 2002:16, Working Paper Series from Uppsala University, Department of Economics
Abstract:
This paper estimates the macroeconomic effect of labor market programs on labor force participation. Labor market programs could counteract business-cycle variation in the participation rate that is due to the discouraged-worker effect, and they could prevent labor force outflow. An equation that determines the participation rate is estimated with GMM, using panel data (1986-1998) for Sweden's municipalities. The results indicate that labor market programs have relatively large and positive effects on labor force participation. If the number of participants in labor market programs increases temporarily by 100, the labor force increases immediately by around 63 persons. The effect is temporary so the number of participants in the labor force returns to the old level in the next period. If the number of participants in programs is permanently increased, the labor force increases by about 70 persons in the long run.
Keywords: Labor supply; Labor market programs; Dynamic panel data (search for similar items in EconPapers)
JEL-codes: E64 J22 J68 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2002-05-15
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (7)
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