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This article deals with the negative emotional consequences of active labour market policies (ALMPs) for long-term unemployed young adults in Finland. Although such policies may have positive effects, an exploration of their negative impacts reveals their problematic side effects. We explore various aspects of ALMP interventions that prevent individuals from gaining such positive outcomes and thus reduce their motivation to invest in the policies.

Drawing on the affect theory of social exchange, we understand that individuals seek positive rewards from social interactions. Our data is taken from life course interviews with unemployed people aged 20–31 in central Finland in 2012–2013.

We find three factors linked to ALMPs that diminish participants' emotional well-being: experiences of unfairness, lack of control and a mismatch between ALMPs and clients' needs. By paying attention to aspects of labour market policy that diminish emotional well-being, it is possible to build more functional policies that better meet the needs of long-term unemployed individuals.

This study fills a significant gap in the literature, because there is limited research on unintended negative outcomes of ALMP activation.

The purpose of this paper is to review the results of studies that investigate the most important active labour market policy (ALMP) measures in Germany. A focus is also on programmes devoted to foster entrepreneurship which can make important contributions to a country’s growth and social welfare.

The study relies on quantitative and qualitative assessments and a comparison of results of previous studies on ALMPs.

The available evidence suggests that most ALMP measures increase labour market prospects of the participants. In particular, evaluations of the entrepreneurship promotion activities show high success rates as well as high cost efficiency. The bulk share of participants of entrepreneurship measures is still self-employed after several years and nearly one-third of these businesses had at least one employee. The authors mention problems regarding the evaluation of previous programmes and highlight future challenges of German ALMP.

This is the first study on ALMP that has an extensive and explicit focus on entrepreneurship-promoting programs.

This article argues that some of the most profound costs of unemployment are social in nature, rather than solely economic. Consequently, the aim of the paper is to argue that the design and evaluation of active labour market policies (ALMPs) should incorporate a better and more sophisticated understanding of how such interventions affect the health, well‐being and social exclusion of the unemployed, as opposed to more typically economic outcomes like re‐employment and wage levels.

To achieve this, a range of theoretical and empirical evidence is reviewed that shows how unemployment is consistently associated with a range of health and social problems. Evidence is also presented that demonstrates the capacity that ALMPs have to intervene and mediate such problems.

The evidence presented demonstrates that not only is unemployment associated with a range of health and social problems but it appears to have a causal function. Further, the evidence also demonstrates how the causal pathway that leads from unemployment to poor health, low well‐being and social exclusion is often psychosocial in nature. It is argued that such findings reinforce the potential that activation policies have to improve the qualitative, psychosocial environment of unemployment for the better.

This article argues that politicians, policy‐makers and academics should take a more holistic approach vis‐à‐vis ALMPs, beyond the more typical economic‐centric way in which such programmes are often conceptualised. Further, it offers a framework for future research; suggesting that further work should focus on analysing the impacts of qualitatively different types of active interventions. To achieve this, a framework – based upon Bonoli's typology – is outlined.

The paper discusses the various models that can be used to analyse the aggregate impact of active labour market policy (ALMP) on labour market outcomes. The aggregate approach to policy evaluation is important. Contrary to evaluations based on micro data, it takes substitution, displacement and other indirect effects into account. The most promising framework for analysing the aggregate impact of ALMP is offered by a flow model approach of the labour market. However, other approaches such as VAR models are also treated in the paper. After discussing the theoretical models the paper gives a review of the empirical literature, in which these models are used to measure the aggregate impact of ALMP. On the basis of the results we are bound to conclude that ALMP makes a big difference to the level of unemployment. There is some evidence that disadvantaged groups benefit more from this type of policy than other groups. The fact that the impact is small on average may hide considerable variation between regions and sites. Future research should concentrate on attempting to relate this variation to differences in implementation. Then we might be able to identify the factors that are decisive for the success or failure of programmes which could then be used to improve ALMP.

The strategy of an active labour market policy (ALMP) is popular, but its content is still far from clear. With this historical and contextual analysis, the author aims to capture the strategy’s core content. Development of the strategy has been full of paradoxes. However, the goal of improving the functioning of the labour market so as to promote full employment without accelerating inflation has remained, as have the central attributes of ALMP, its selectivity and supply‐side measures. Labour market circumstances have changed significantly since the creation of the strategy and many of its premises have been questioned. Although the strategy has been vital, it is today once again in crisis. However, encouraging employment development in some European countries shows that an active labour market policy can play an important role together with economic policy and the policy of the social partners.

Purpose – Since the mid-1980s, unemployment policy reforms in Europe and throughout the rich democracies have stressed publicly supported activation of the unemployed through both reductions in perceived disincentives to work as well as commitments for improved training, employment services, and related policies. In this chapter, I systematically explore the domestic and international political economic sources of these policy changes.

Methodology/approach – I test a set of hypotheses – original and derivative – about the domestic and international determinants of labor market policy change through pooled time-series cross-section analysis of 1980-to-2002 annual data from 18 capitalist democracies. The dependent variables consist of national spending on active labor market policy, measures of passive unemployment compensation benefits, and the ratio of active to passive unemployment program spending. Causal models account for spatial diffusion of policy reforms as well as core political and economic determinants of policy change.

Findings – I find that Left party governments and coordinated market institutions buoy resources for active labor market programs, maintain relatively generous passive unemployment supports and entitlements, and, at the same time, foster a shift to more active social policy. International trade openness promotes generous active labor market policies while more left-leaning voters and veto points within the polity significantly constrain reductions in unemployment benefits and entitlement rights. De-industrialization reinforces policy reforms toward activation while high unemployment rates engender cuts in passive unemployment benefits and eligibility conditions.

Originality/value – Overall, the chapter demonstrates that the economic effects on policy change notwithstanding, politics fundamentally matters: domestic political dynamics and variations in institutions explain the preponderance of the change (or lack thereof) in unemployment policy.

The purpose of this paper is to provide quantitative estimates on the impact of active labour market policy (ALMP) on youth unemployment in Europe based on a macroeconomic panel data set of youth unemployment, ALMP and education policy variables and further country-specific characteristics on labour market institutions and the broader demographic and macroeconomic environment for all EU-Member States.

The authors follow the design of an aggregate impact analysis, which aims to explain the impact of policy on macroeconomic variables like youth employment and unemployment (see Bellmann and Jackman, 1996). This follows the assumption that programmes, which are effective in terms of improving individual employment opportunities, are going to make a difference on the equilibrium of youth unemployment.

The findings show that both wage subsidies and job creation are reducing aggregate youth unemployment, which is in contrast to some of the surveys of microeconomic studies indicating that job creation schemes are not effective. This finding points towards the importance to assist young people making valuable work experience, which is a benefit from job creation, even if this experience is made outside regular employment and/or the commercial sector.

In terms of the variables to model public policy intervention in the youth labour market, only few indicators exist, which are consistently available for all EU-Member States, despite much more interest and research aiming to provide an exhaustive picture of the youth labour market in Europe. The only consistently available measures are spending on ALMP as a percentage of gross domestic product (in the different programmes) and participation stocks and entries by type of intervention.

The different effects found for the 15–19 year olds, who seem to benefit from wage subsidies, compared to the effect of job creations benefitting the 20–24 year olds, might relate to the different barriers for both groups to find employment. Job creation programmes seem to offer this group an alternative mechanism to gain valuable work experience outside the commercial sector, which could help form a narrative of positive labour market experience. In this way, job creation should be looked more positively at when further developing ALMP provision, especially for young people relatively more distant to engagement in regular employment.

Improving the situation of many millions of young Europeans failing to find gainful employment, and more generally suffering from deprivation and social exclusion, has been identified as a clear priority for policy both at the national level of EU-Member States and for EU-wide initiatives. With this study, the authors attempt to contribute to the debate about the effectiveness of policies which combat youth unemployment by estimating the quantitative relationship of ALMP and other institutional features and youth unemployment.

To research the relationship between youth unemployment and ALMP, the authors created a macroeconomic database with repeated observations for all EU-Member States for a time series (1998–2012). The authors include variables on country demographics and the state of the economy as well as variables describing the labour market regimes from Eurostat, i.e. the flexibility of the labour market (part-time work and fixed-term employment as a percentage of total employment) and the wage setting system (level and coordination of bargaining and government intervention in wage bargaining).

The article assembles efficiency and equity arguments for and against targeting the long‐term unemployed in active labour market policies (ALMP), and refers to evidence from applications to date. The theory and practices of ALMP differ somewhat between low and high unemployment countries. The approach taken in Sweden in the 1960s to 1980s is used to discuss low unemployment countries, and OECD analysis in the 1990s to represent theory for the high unemployment countries. Targeting the long‐term unemployed is specifically a policy for high unemployment countries, and depends particularly on effects on wage pressure. The article concludes by urging that equity arguments be considered as well as efficiency and by drawing attention to the form which targeting takes. Comments are made about Britain’s New Deal in relation to the form of targeting.

Analyses Polish active labour market policy programmes (ALMP) from a macroeconomic (regional) point of view. The effects of training programmes on the outflows from unemployment into employment and the effects of all ALMP programmes on the outflows from employment into unemployment (to identify displacement effects) are estimated. The empirical evidence gives no support to the view that public training programmes can be used to reduce unemployment, and there is no robust evidence for displacement effects by any ALMP programme. The result that start‐up loans can reduce flows from employment into unemployment is only weakly significant.

The purpose of this paper is to investigate how active labour market policy (ALMP) training programmes and hiring subsidies increase or decrease differences in the unemployment risk between lesser and higher educated people during an economic downturn. A focus is put on potential job competition dynamics and cumulative (dis)advantages of the lesser and higher educated.

The paper uses multi-level data. The fifth wave (2010) of the European Social Survey was used and combined with macro-level data on labour market policies of the OECD. The sample consisted of 18,172 observations in 19 countries.

The results show that higher levels of participation and spending on training policies are related to a smaller difference in the unemployment risks of the educational groups. Higher training policy intensity is associated with a lower unemployment risk for the lesser educated and a higher unemployment risk for the higher educated. This implies that the lesser educated are better able to withstand downward pressure from the higher educated, thereby, reducing downward displacement during an economic downturn. Hiring subsidies do not seem to be associated with the impact of education on unemployment.

The paper adds to the discussion on ALMP training and hiring subsidies that are primarily rooted in the human capital theory and signalling theory. Both theories ignore the social context of labour market behaviour. The job competition theory and cumulative (dis)advantage theory add to these theories by focussing on the relative position of individuals and the characteristics that accompany the social position of the individual.