Unemployment reduction or labor force expansion? How partisanship matters for the design of active labor market policy in Europe

Abstract

Comparative scholars fundamentally disagree about the impact of partisan politics in modern welfare states, particularly in certain ‘new’ policy areas such as active labor market policy (ALMP). Using new data on 900 ALMP programs across Europe, this study attempts to reconcile a long-standing dispute between the traditional ‘power resources’ approach and the ‘insider/outsider’ approach pioneered by Rueda. The study argues that both left-wing and right-wing governments invest in ALMP but that politics still matter because parties’ preferences regarding unemployment differ. The left is more inclined to expand programs primarily designed to reduce unemployment, which exclusively target ‘core’ groups in, or at risk of, unemployment, and programs in which participants are no longer counted among the unemployed. In contrast, both sides are equally prone to expand programs that also—or instead—target people who are not yet participating in the labor market, which thus also—or instead—serve to increase labor supply.

Reducing unemployment? Examining the interplay between active labour market policies

“…Beyond the role of employers, the welfare regime literature (see Esping‐Andersen, 1990), indicate that political actors affect the extent (Boix, 1998; Nelson, 2013), as well as the composition of spending on ALMP (Cronert, 2019; Iversen & Stephens, 2008). While the aversion to state intervention entails low spending on all types of ALMP in liberal welfare regimes, CMEs are split between Social Democratic regimes (i.e., Nordic countries) and conservative or Christian Democratic regimes (i.e., Continental Europe).…”

“…However, design of programs may also have different effects across target groups, where studies on German administrative data show that sequences of classroom training can be beneficial for long‐term unemployed (Dengler, 2019). While the latter highlights the importance of continued and intensified training, it should also be noted that participation in programs may renew eligibility for unemployment benefits (Cronert, 2019). If that is the case, increases in job‐search intensity may not occur.…”

Towards a Swiss Army Knife State? The changing face of economic interventionism in advanced democracies, 1980–2015

“…Turning to ALMP, scholars have recently begun to relax the commonplace assumption that these policies primarily benefit labor market 'outsiders' at the expense of 'insiders', and instead argue that they may actually target rather different groups and consequently come with rather different distributional profiles. For instance, studies have shown that right-wing governments are more positive towards ALMP when such policies partly or exclusively target outsiders, whereas left-wing governments are more prone to expand programs that also target 'insiders' (Cronert, 2019;Gingrich & Ansell, 2015).…”

Accommodation or Extraction? Employers, the State, and the Joint Production of Active Labor Market Policy

“…The effect of partisanship on ALMP development has been perhaps the most contested issue in comparative ALMP research over the past decade. 24 In recent years, a new but still inconsistent wave of research has suggested that the role of partisanship varies across categories of ALMP programs. 25 Regarding employment subsidies and other employer-involving programs such as those in focus here, studies support two conflicting hypotheses.…”