The impact of labour market policies on outcomes in OECD countries: An empirical analysis

Abstract

Labour market policies are a topic of debate in all countries that has become increasingly relevant during the recent crises. This study aims to assess the impact of labour market policies on labour market outcomes. The empirical analysis is based on a panel data model with fixed effects for the studied OECD countries. The analysis indicates that higher levels of public spending on labour market policy are associated with improved labour market outcomes. The results also suggest that higher unionisation among employees promotes job-seeking and engagement in the workforce. Based on the results for disaggregated active labour market policies, it can be supposed that training and employment incentives show the most beneficial results, both in terms of reducing unemployment and increasing employment and participation. Thus, our results suggest that labour market policies play an important role in terms of labour market outcomes in OECD countries.