Active labour market policies in Spain: A macroeconomic evaluation

Abstract

Using aggregate panel data on Spain's 17 regions for the period 1987–2010, the authors present a macroeconomic assessment of a variety of active labour market policies, including employment subsidies for permanent contracts, job‐creation schemes and vocational training programmes. Their results suggest that employment subsidies for permanent contracts had no notable effect on aggregate levels of permanent or temporary employment. However, they do appear to have had a small positive effect on transitions from unemployment to employment, and from temporary to permanent employment, particularly since the 1997 labour reform. Better targeted subsidies, the authors conclude, would have incurred fewer deadweight and substitution effects.