Labor Market Programs, the Discouraged-Worker Effect, and Labor Force Participation

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2002:16

Classification and Topics

• Classification: Wirtschaft ; Incomes Policy; Price Policy ; Time Allocation and Labor Supply ; Mobility, Unemployment, and Vacancies: Public Policy
• Subject: Labor supply ; Labor market programs ; Dynamic panel data ; Arbeitsmarktpolitik ; Arbeitsangebot ; Panel ; Schweden

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Johansson, Kerstin
• Event: Veröffentlichung
• (who): Uppsala University, Department of Economics
• (where): Uppsala
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/82888
• URN: urn:nbn:se:uu:diva-4447
• Last update: 10.03.2025, 11:41 AM CET