The effectiveness of European active labor market programs

Measures of Active Labor Market Policy are widely used in European countries, but despite many econometric evaluation studies no conclusive cross-country evidence exists regarding ?what program works for what target group under what (economic and institutional) circumstances??. This paper results from an extensive research project for the European Commission aimed at answering that question using a meta-analytical framework. The empirical results are surprisingly clear-cut: Rather than contextual factors such as labor market institutions or the business cycle, it is almost exclusively the program type that matters for program effectiveness. While direct employment programs in the public sector appear detrimental,wage subsidies and ?Services and Sanctions? can be effective in increasing participants? employment probability.

http://dse.univr.it/espe/documents/Papers/D/5/D5_2.pdf

The Effectiveness of European Active Labor Market Policy

Purpose – The purpose of this paper is to assess the impact of financial crises on the youth unemployment rate (YUR). The authors consider different types of financial crises (systemic banking crises, non‐systemic banking crises, currency crises and debt crises) and different groups of countries, according to their income level.Design/methodology/approach – After a review of the existing (theoretical and empirical) literature on the determinants of the YUR in general and at the occurrence of economic crises, the authors present empirical estimations on the impact of past financial crises on young workers. The relationship between financial crises and YUR is investigated by employing fixed effects panel estimation on a large panel of countries (about 70) around the world for the period 1980‐2005. The “persistence” over time of the impact is also investigated. Finally the Arellano‐Bond dynamic panel is estimated, confirming the significance of the results.Findings – According to the authors’ empirical estim...

Youth unemployment rate and impact of financial crises

Mismatches between workers’ competences and what is required by their job are widespread in OECD countries. Studies that use qualifications as proxies for competences suggest that as many as one in four workers could be over-qualified and as many as one in three could be under-qualified for their job. However, there is significant variation across countries and socio-demographic groups. Our meta-analysis of country studies suggests that over 35% of workers are over-qualified in Sweden compared with just 10% in Finland, with most other OECD countries located between these two extremes. There is also extensive evidence that youth are more likely to be over-qualified than their older counterparts and the same is found to be true for immigrant workers compared with a country’s nationals. On the other hand, no definitive evidence has been found of the persistence of qualification mismatch, with some papers showing that over-qualification is just a temporary phenomenon that most workers overcome through career mobility and others finding infrequent transitions between over-qualification and good job matches. Across the board, over-qualified workers are found to earn less than their equally-qualified and well-matched counterparts but more than appropriately-qualified workers doing the same job. Under-qualified workers are found to earn more than their equally-qualified and well-matched counterparts but less than appropriately-qualified workers doing the same job. Over-qualified workers are also found to be less satisfied about their job and more likely to leave their work than well-matched workers with the same qualifications….

/pdf/over-qualified-or-under-skilled-a-review-of-existing-tqipx0anuu.pdf

Over-qualified or under-skilled: a review of existing literature

High and persistent unemployment has been a major blot on the economic and social record of most OECD countries since the early 1970s: the OECD average standardised unemployment rate rose from just over 3 per cent in 1973 to 7.3 per cent in 1997. In response to growing political concerns about the seemingly inexorable rise in unemployment, OECD Ministers gave the Organisation a mandate in 1992 to analyse the causes and consequences of high and persistent unemployment and propose effective remedies to deal with the problem.

What Works Among Active Labour Market Policies: Evidence from OECD Countries' Experiences | Conference – 1998

This note aims to provide a theoretical framework to think of the youth unemployment problem and a classification of EU countries according to the way they address it. The key factor to explain youth unemployment is what we call the youth experience gap. To help young people fill it in and ease school-to-work transitions, every EU country provides a mix of policy instruments, including different degrees and types of labour market flexibility, of educational and training systems, of passive income support schemes and fiscal incentives. Five different country groups are detected whose outcomes in terms of youth unemployment are dramatically different: a) the North- European; b) the Continental European; c) the Anglo-Saxon; d) the South-European; e) New Member States. The Lisbon strategy provides guidelines in line with the theoretical framework discussed here, but it is costly and hard to implement.

The Youth Experience Gap. Explaining differences across EU countries

This essay delivers two main innovations with respect to the existing literature. First, and foremost, by extending the work of Nicaise (2010) relative to the reservation wage to the case of overeducation, we propose a statistical test to discriminate between alternative theoretical interpretations of the determinants of overeducation through the Heckman sample selection procedure. Second, the essay provides the first available economic analysis of the consequences of the educational mismatch in Italy as based on AlmaLaurea data, the largest and richest data bank available in the country. The data includes a large number of university graduates enrolled in a given year before the Bologna reform and asks a large number of questions allowing us measuring among others the quality of education from high school. This wealth of information is a condition to provide the most comprehensive, accurate and reliable assessment of overeducation in the country. The educational mismatch 5 years from graduation is relatively high—at 11.4 and 8% for overeducation and overskilling, respectively—by EU standards. Ceteris paribus the parents of the mismatched have lower educational levels according to school tracking. Most humanities and social sciences degrees but also geology, biology and psychology are associated with both types of mismatch. The quality of education also correlates to the educational mismatch. We find a non-conditional wage penalty associated to overeducation and overskilling of 20 and 16% and a conditional one of about 12 and 7%, respectively. The Heckman sample selection model returns a slightly higher sample selection corrected wage penalty, supporting not only the job competition and job assignment models, but also the human capital model. Other concurrent statistical tests point to the difficulty that the educational system faces in providing work-related skills to graduates.

https://www.econstor.eu/bitstream/10419/155277/1/GLO_DP_0015.pdf

Overeducation at a Glance. Determinants and Wage Effects of the Educational Mismatch Based on AlmaLaurea Data

In this paper, we analyse the main determinants of the propensity to NEET status in a selection of European countries. The NEET rate is the share of young people, aged between 19 and 30 years, not in Employment, Education or Training. In treating the 19–24 and 25–30 cohorts separately, our hypothesis is that for the younger cohort NEET status is mainly influenced by the school-to-work transition while for the older cohort this status is primarily due to labour market functioning and institutional factors. We apply different specifications of multilevel models with binary outcomes accounting for both personal and macro-economic factors which afford advantages over simple logit models. Estimates refer to 2007 and 2016 in order to verify how the economic crisis changed NEET status. The results confirm our hypothesis, highlighting the crucial role on the NEET propensity of the school-to-work transition in the first approach to the labour market, but also the strong influence of long-term unemployment, confirming the structural nature of the NEET phenomenon especially in countries where NEET levels remain high even during times of economic recovery.

Being NEET in Europe Before and After the Economic Crisis: An Analysis of the Micro and Macro Determinants

Until recently, regional labour market imbalances were considered transitory phenomena, a consequence of state failure in generating distorted investment incentives in depressed regions as well as of excessive labour market rigidities. Labour mobility and wage flexibility were at the core of the debate over the causes of and cures for regional labour market imbalances. This book bears witness to the changed perspective of research on these issues. In the recent literature, internal labour migration is depicted as a cause of further divergence between advanced and backward regions, as higher returns on human and physical capital are expected to be paid in those regions where these factors are already concentrated. The book contributes to the debate by presenting important new findings on: a) the reasons why structural change in some sectors causes a slump in some regions, but not in others; b) the extent to which poverty traps explain regional imbalances as compared to such other alternative factors as spatial dependence and nonlinearity in growth behaviour; c) the degree of convergence across EU countries and regions; d) the role of labour mobility in reducing/increasing regional labour market imbalances, in particular in Central and Eastern Europe; e) the role of an active labour market policy and child care facilities in alleviating the hardship of the weakest segments of the population.

The Labour Market Impact of the EU Enlargement

This paper provides the first available evidence on overeducation/overskilling based on AlmaLaurea data We focus on jobs held 5 years after graduation by pre-reform graduates in 2005 Overeducation/overskilling are relatively high  at 114 and 8%  when compared to EU economies Ceteris paribus they tend to be more frequent among children of parents with lower educational levels, through school tracking Most arts degrees and social sciences, but also Geology and Biology are associated to both types of the educational mismatch The quality of education is also a factor, suggesting that in addition to the low demand for skills, one should also reckon the inability of the educational system to provide work-related skills Moreover, we find a non-conditional wage penalty of 20% and 16% and a conditional one of about 12% and of 7%, respectively Heckit returns a sample selection corrected penalty slightly higher, supporting not only the job competition and job assignment models, but also the human capital model

/pdf/overeducation-at-a-glance-determinants-and-wage-effects-of-2rwiq84t0j.pdf

Floro Ernesto Caroleo

Papers

The Youth Experience Gap. Explaining differences across EU countries

Overeducation at a Glance. Determinants and Wage Effects of the Educational Mismatch Based on AlmaLaurea Data

Being NEET in Europe Before and After the Economic Crisis: An Analysis of the Micro and Macro Determinants

The Labour Market Impact of the EU Enlargement

Overeducation at a glance. Determinants and wage effects of the educational mismatch, looking at the AlmaLaurea data