Labour Market Programmes and the Equity-Efficiency Trade-Off

Trine Filges, John Kennes, Birthe Larsen, Torben Tranæs

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

This paper studies optimal labour market policy in a society where differently gifted individuals can invest in training to further increase their labour market productivity and where the government seeks both efficiency and equity. Frictions in the matching process create unemployment and differently skilled workers face different levels of risk of unemployment. We show that in such an environment, training programmes that are targeted at the disadvantaged workers complement passive transfers (UI benefits), unlike general training subsidies. Combining passive subsidies with a training subsidy conditioned on the individual being unemployed (for a period) – the typical Active Labour Market Programme – creates a favourable trade-off between equity and efficiency and this encourages high spending on training
Original languageEnglish
JournalJournal of Macroeconomics
Volume33
Issue number4
Pages (from-to)738-753
ISSN0164-0704
DOIs
Publication statusPublished - 2011

Keywords

  • Unemployment
  • Efficiency
  • Training

Cite this

Filges, Trine ; Kennes, John ; Larsen, Birthe ; Tranæs, Torben. / Labour Market Programmes and the Equity-Efficiency Trade-Off. In: Journal of Macroeconomics. 2011 ; Vol. 33, No. 4. pp. 738-753.
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Labour Market Programmes and the Equity-Efficiency Trade-Off. / Filges, Trine; Kennes, John; Larsen, Birthe; Tranæs, Torben.

In: Journal of Macroeconomics, Vol. 33, No. 4, 2011, p. 738-753.

Research output: Contribution to journalJournal articleResearchpeer-review

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