Scandinavian Working Papers in Economics

Working Papers,
Copenhagen Business School, Department of Economics

No 14-2000: DOES ACTIVE LABOUR MARKET POLICY REDUCE UNEMPLOYMENT WHEN SEARCH IS ENDOGENOUS?

Trine Filges and Birthe Larsen
Additional contact information
Trine Filges: Department of Economics, Copenhagen Business School, Postal: Department of Economics, Copenhagen Business School, Solbjerg Plads 3 C, 5. sal, DK-2000 Frederiksberg, Denmark
Birthe Larsen: Department of Economics, Copenhagen Business School, Postal: Department of Economics, Copenhagen Business School, Solbjerg Plads 3 C, 5. sal, DK-2000 Frederiksberg, Denmark

Abstract: We analyse the effects active labour market programmes (ALMPs) have on unemployment in a union wage-setting framework when search is endogenous. We assume that a union president, elected by majority voting determines the wage. We analyse the case where ALMPs increase match efficiency of the marginalized workers, and show that ALMPs may increase unemployment.

Keywords: Endogenous Search; Active Labour Market Policy; Unemployment

JEL-codes: J41; J64; J68

29 pages, September 1, 2000

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