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Core or Periphery? Target Groups of ALMPs and Transitions to Employment in the European Union

European Union
Social Policy
Welfare State
Quantitative
Daniel Fredriksson
Stockholm University
Daniel Fredriksson
Stockholm University

Abstract

This paper examines the role of active labour market policies (ALMP) with respect to transitions to employment from unemployment and inactivity in the European Union. Typically, the effects of ALMP on labour market outcomes are either assessed through macro level analysis, relating spending on labour market programs to aggregate unemployment, or econometric models that evaluate how participation in specific labour market programs affects subsequent employment prospects. However, ALMPs can either aim to reduce unemployment, targeting mainly the registered unemployed, or aim to increase labour force participation, thus targeting the inactive population. This distinction is typically neglected, but should matter for the probability of making transitions to employment since welfare states exhibit large variations in terms of both policy aims and labour market policy design. I use hierarchical event-history analysis to analyse individual transitions to employment. The main data source is the European Survey on Income and Living Conditions (EU-SILC), which is combined with country-level macroeconomic indicators and a new dataset containing qualitative indicators regarding most national and regional labour market programs and policies in the EU since 1998. The latter allows me to analyse if the distinction between unemployment reduction or labour force participation has potential trade-offs and affects the probability of transitioning to employment from unemployment and inactivity in different ways.