The Distributional Impacts of Active Labor Market Programs for Indigenous Populations

We evaluate the distributional impacts of active labor market programming for indigenous peoples in Canada. Using administrative data and an empirical strategy that compares participants in high-intensity programs--skills interventions, job-creation partnerships, or wage subsidies--to those in low-intensity programs, such as employment assistance or job counseling, reveals large returns to high-intensity programming for above-median earnings. Returns are largest for women at the mean, suggesting that high-intensity programming may reduce gender gaps in earnings among participants, who represent 10 percent of all indigenous people in Canada. Larger returns at the top of the distribution indicate that overall inequality among participants could increase.

Active Labor Market Programs for Youth

Scholars from different fields have studied youth unemployment: its causes, consequences, and ways to tackle it. This chapter provides an overview of the most important results with a specific focus on effectiveness. Among the topics reviewed are the need for research regarding effectiveness, different methods to study effectiveness, and how the results of these methods are appraised. Then other factors than the research design are described to assess the practical significance of ALMPs, followed by a description of the results of recent reviews and meta-analyses. Finally, some selected factors that impact ALMP effectiveness are discussed. This chapter ends with a discussion of current debates and identification of future research opportunities.

The Marginal Benefit of an Active Labor Market Program Relative to a Public Works Program: Evidence from Papua New Guinea

Policymakers typically try to address youth unemployment in developing countries through either active labor market programs (ALMPs) or labor-intensive public works programs (LIPWs). We examine whether there is any additional benefit for unemployed youth from participating in a comprehensive ALMP compared to a LIPW. We exploit an unanticipated intervention in the largest employment program in Papua New Guinea, which resulted in one intake of the program completing a LIPW and missing out on a comprehensive ALMP. We conduct a difference-in-difference analysis between participants in the intake that missed out on the ALMP component of the program and participants in the intakes immediately before and after. In contrast to most impact evaluations of ALMPs, we show youth that completed the comprehensive ALMP were around twice as likely to be employed in the formal sector 9–12 months after the program compared to similar youth in the intake that only completed a LIWP. This effect was entirely driven by 20% of youth who participated in the ALMP staying with the employer they were placed with following the end of the program. Surveys of these employers illustrate that they use the ALMP as a low-cost, low-risk, and relatively low-effort way of hiring new employees.

The Role of Institutions in the Labor Market Impact of Immigration

We study the role of labor market institutions and policies in affecting the wage impact of immigration using a cross-country meta-analysis approach. We gather information on 1,548 previously reported semi-elasticities from 66 academic studies covering 20 developed countries. We supplement this dataset with country-level institutional structure and coverage data from the OECD. These include employment and wage rigidities, labor mobility, active labor market programs spending, and product market regulation. We relate estimated wage effects and institutional coverage while con- trolling for local economic conditions, immigrant skill composition, time and region fixed effects and study characteristics. Higher labor market rigidity, as brought about by more widespread institutions, regulations and policies, mitigates the effects on relative wages of high- versus low-skilled natives but exacerbates the impacts on average earnings. Overall, our results suggest that labor mar- ket institutions and policies may be effective tools in the economic absorption of foreign workers.