Research Papers in Economics, Department of Economics, Stockholm University
Active Labour Market Programmes, Education and Unemployment
Abstract: The paper formalises the interaction between active labour
market programmes and ordinary higher education in a general equilibrium
framework. Both education in prorgammes and ordinary higher education serve
to increase the supply of high-skilled labour. The model features a dual
labour market where wages and employment are determined by labour-demand
and wage-setting schedules. Programmes are shown to have crowding-out
effects on both regular employment and the number of students in ordinary
higher education. Numerical calibrations of the model show that social
welfare is lower in an economy with educational programmes than in an
economy without such programmes.
Keywords: Active labour market programme; education; unemployment; dual labour market; welfare; (follow links to similar papers)
JEL-Codes: J31; J41; J64; J68; R13; (follow links to similar papers)
26 pages, June 12, 2001
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