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Effects of active labour-market policies on welfare state finances

Published online by Cambridge University Press:  11 May 2020

Hyejin Ko Open the ORCID record for Hyejin Ko [Opens in a new window]  and
Eunchong Bae Open the ORCID record for Eunchong Bae [Opens in a new window]
Hyejin Ko
Affiliation:
Associate Research Fellow, Department of Future Strategies Research, Korea Institute for Health and Social Affairs, Sejong, Republic of Korea
Eunchong Bae*
Affiliation:
Institute of Social Welfare, Seoul National University, Seoul, Republic of Korea.
*
Email: withchong@gmail.com
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Abstract

This study seeks to determine the effectiveness of the active labour-market policies (ALMPs) of employment-oriented welfare states contribute to the financial soundness of welfare states. Even if they are insignificant, overall, the results show that ALMPs lead to higher employment rate and sounder public finances as could be expected by the central idea of employment-oriented welfare states. However, extending ALMPs does not always create a virtuous circle among government interventions, employment rate and fiscal soundness. That is, the results for employment and public finances depend on how the government intervenes in the labour market. We argue that the critical point goal should be to improve employability, not just to increase the employment rate.

Keywords

welfare statedeficitactive labour market policy (ALMP)employment rateemployability
Type
Research Article
Information
Journal of International and Comparative Social Policy , Volume 36 , Issue 2 , July 2020 , pp. 200 - 216
Copyright
© The Author(s), 2020. Published by Cambridge University Press on behalf of Social Policy Association

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