Political Cycles in Active Labor Market Policies

Mario Mechtel and Niklas Potrafke

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines how electoral motives and government ideology influence active labor market policies (ALMP). We present a model that explains how politicians strategically use ALMP to generate political cycles in unemployment and the budget deficit. Election-motivated politicians increase ALMP spending before elections irrespective of their party ideology. Leftwing politicians spend more on ALMP than rightwing politicians. We test the hypotheses derived from our model using German state data from 1985:1 to 2004:11. The results suggest that ALMP (job-creation schemes) were pushed before elections.

Keywords: active labor market policies; political cycles; labor market expenditures; opportunistic politicians; partisan politicians (search for similar items in EconPapers)
JEL-codes: E62 H61 H72 J08 P16 (search for similar items in EconPapers)
Date: 2009-03, Revised 2010-05
New Economics Papers: this item is included in nep-cdm, nep-lab and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Political Cycles in Active Labor Market Policies (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:22780

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