Evaluating Active Labor Market Programs in Europe and Central Asia
Ref. no. 680-73
Active labor market programs (such as public works, retraining, job search assistance, and job subsidies) are becoming increasingly common in transition economies, which are experiencing unprecedented levels of unemployment. There are social, political, and economic reasons for government action to quicken the redeployment of labor and cushion the impact of layoffs. Nevertheless, to avoid costly mistakes, investments in labor market programs need to be carefully and quickly evaluated. The goal of this project is to develop comprehensive data on the costs of selected active labor market programs and evaluate the effectiveness of the programs in helping different groups of the unemployed under varying labor market conditions and during different stages in the transition to a market economy. The countries participating in the study are the Czech Republic, Hungary, Poland, and Turkey.
The research addresses several questions: What are the key indicators of success for different types of active labor market programs? How can information be collected on these indicators? Do the results justify the expenditures? And how can information be used to improve the targeting and effectiveness of program delivery?
Nonexperimental techniques that examine program participants' labor market success relative to that of an otherwise similar group of nonparticipants are used to evaluate the effectiveness of programs. The economic costs considered include direct program costs and the opportunity costs for participants. Cost-benefit ratios for active labor market programs will be calculated, and the results used to determine cost-effectiveness rankings for the programs.
The research project is being carried out in two phases. In the first, a detailed framework for the study was drawn up. In the second phase, now in the final stages, the data were collected and are being analyzed.
The study should help resolve the debate within the Bank between advocates of growth-oriented policies (combined with social safety nets for the most needy) and advocates of labor market interventions such as retraining and public works. For client countries that have decided to invest in active labor market programs, the study will help determine the relative cost-benefit ratios of alternative programs and thus how much to allocate to each intervention. It will also provide guidance in targeting programs to those who will benefit most.
The study's findings will be disseminated in the participating countries by Bank staff involved with the study, by consultants, and by task managers of Bank-supported employment projects.
Responsibility: Latin America and the Caribbean, Country Department I, Country Operations Unit 1--Indermit Gill (igill@worldbank.org); and Europe and Central Asia, Country Departments I and II, Human Resources Operations Division--David Fretwell. With Upjohn Institute for Employment Research and ABT Associates.
Completion date: December 1997.
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