An Evaluation of the Swedish Active Labor Market Policy: New and Received Wisdom

Anders Forslund, Alan B. Krueger

NBER Working Paper No. 4802
Issued in July 1994
NBER Program(s):   LS

About 3% of GNP is spent on government labor market programs in Sweden, compared to 2% in Germany and less than 0.5% in the U.S. In Sweden these programs include extensive job training, public sector relief work, recruitment subsidies, youth programs, mobility bonuses, and unemployment benefits. Using county-level data, we provide new evidence that public relief workers displace other workers, especially in the construction sector. Our review of the previous literature suggests that job training programs have small effects on wages and re-employment in Sweden, but precise inferences are difficult because of small sample sizes. We also investigate alternative reasons for the stability of the Beveridge Curve in Sweden, and compare regional evolutions of employment and unemployment in Sweden and the U.S. Lastly, we present cross-country analysis for 1993 which, contrary to studies that use earlier data, shows that the extent of a country's active labor market programs is positively associated with the national unemployment rate.

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Document Object Identifier (DOI): 10.3386/w4802

Published:

• The Welfare State in Transition, Freeman, Richard, Birgitta Swedenborg,and Robert Topel, eds., Chicago: The University of Chicago Press, 1997,pp. 267-298. ,
• An Evaluation of the Swedish Active Labor Market Policy: New and Received Wisdom, Anders Forslund, Alan B. Krueger. in The Welfare State in Transition: Reforming the Swedish Model, Freeman, Topel, and Swedenborg. 1997

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