A Case Study about Active Labour Market Policy
Introduction: In recent years, there has been a growing interest in so called active labour market policy as a means of fighting the persistent unemployment in Western Europe. This is easy to understand in view of the disillusionment with more aggregate policies.
On the one hand, traditional demand stimulation faces the risk of primarily increasing inflation with only small effects on employment; on the other hand, supply-side structural reforms in order to remove various labour market rigidities have either been difficult to implement or appear to produce only slow results. In this situation, active labour market policy seems to be regarded by many as the deus ex machina that will provide the solution to the unemployment problem. It is the purpose of this paper to make a realistic appraisal.
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