A framework for analyzing the political support for active labor market policy


Journal of Public Economics

février 1998, vol. 67, n°2, pp.151-165

Départements : Finance

We develop a general equilibrium analysis of the impact of active labor market policy on unemployment, wages and the welfare of the employed. This framework is used to assess the political support in favour of such policies and to relate it to the working of Such policies and other parameters characterizing the economic environment. The main finding is that if the employed have little exposure to unemployment and if the demand for unskilled labour is inelastic, then there may be political support for policies which actually raise the equilibrium level of total unemployment