Carrots or sticks? A multilevel analysis of active labour market policies and non-standard employment in Europe

Abstract

Spending on active labour market policies (ALMPs) has increased across Europe following the 2007 flexicurity strategy which emphasised smooth and rapid transitions from unemployment to work. Despite broad scholarly coverage of the activation turn, the connection between labour market policies and changes in non-standard employment remains unclear. Applying random effects within-between regression analysis, this paper finds that coercive, ‘hard’ ALMP instruments incentivising rapid re-employment with the threat of withdrawing unemployment benefits are associated with higher likelihood of involuntary part-time employment, whereas supportive, ‘soft’ ALMP strategies with a focus on upskilling and public sector occupation are associated with higher voluntary but lower involuntary part-time employment. The results from 25 countries over two decades shed light on the heterogeneous results of past ALMP research which has not adopted a consistent line on the supportive-coercive dichotomy. With European employment policy increasingly applying hard activation instruments to achieve full employment, an unintended consequence might be the expansion of precarious employment.