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Did Active Labor Market Policies Help Sweden Rebound from the Depression of the Early 1990s?

Did Active Labor Market Policies Help Sweden Rebound from the Depression of the Early 1990s?

Chapter:
(p.159) 5 Did Active Labor Market Policies Help Sweden Rebound from the Depression of the Early 1990s?
Source:
Reforming the Welfare State
Author(s):
Anders ForslundAlan Krueger
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226261911.003.0006

There are indications that the modus operandi of the Swedish labor market changed during the 1990s. Most importantly, it is documented that unemployment followed a different, less favorable pattern after the crisis of the 1990s than during the previous four decades. This could reflect the fact that some of those who lost their jobs in the early 1990s remained jobless during very long periods and became less employable in that process. The chapter investigates whether active labor market policy (ALMP) facilitated the recovery from the high unemployment rates of the early 1990s. The chapter concludes that ALMPs probably played a minimal role in reducing total unemployment since the early 1990s. The finding that program participation generally was outperformed by job search, however, points to another alternative. If the social safety nets are kept at a high level, job search and job acceptance incentives must be provided in other ways.

Keywords:   labor market policies, Sweden, unemployment, economic crisis, social safety

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