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IFAU - Institute for Evaluation of Labour Market and Education Policy Working Paper Series
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 1999:7:
Direct displacement effects of labour market programmes: the case of Sweden

Matz Dahlberg () and Anders Forslund ()

Abstract: Using a panel of 260 Swedish municipalities over the period 1987-1996, this paper investigates the direct displacement effects of active labour market programmes (ALMPs). Compared to earlier studies on this topic, we have more and better data. From our GMM estimations, we find that (i) there are direct displacement effects from those ALMPs that generate subsidised labour (in the order of approximately 65 percent), but there seems to be no (significant) displacement effects from training, (ii) most ALMPs seem to increase labour force participation, and (iii) the adjustment to the optimal level of employment seems to be sluggish. A consequence of (ii) is that the earlier studies have overstated the displacement effects (since they nomalised with the labour force).

Keywords: Labour market programmes; Displacement effects; GMM estimation; (follow links to similar papers)

JEL-Codes: J30; (follow links to similar papers)

40 pages, October 1, 1999

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This paper is forthcoming as:
Dahlberg, Matz and Anders Forslund, 'Direct displacement effects of labour market programmes: the case of Sweden', Scandinavian Journal of Economics.



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