The Economic Analysis of the Effects of Active Labor Market Programs on Youth Unemployment

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The purpose of this project is to find the best active labor market programs for Japanese youth labor market. As a result of interviews with many officers at employment offices in Sweden, Denmark, and Norway, I found that the best active labor market programs for young workers in these countries are either subsidised employment programs or education/training programs. The number of the participants in subsidised employment programs and education/training programs covers over 80% of all participants in the active labor market programs in these three countries. Most of the officers at the employment offices in these countries mentioned as follows. Compared with education/training programs, subsidised employment programs have much more clear-cut effects on youth unemployment in terms of shortening the unemployment duration. The effect of education/training programs on the probability of finding a job for participants is in general ambiguous. In order to investigate the effects of these pr … More ograms, I have used a general equilibrium framework and have analyzed the macroeconomic effects of these programs. In my analysis both programs have positive impacts on the youth labor market. Namely, both programs tend to decrease the number of unskilled unemployed workers and increase the probability of finding a job. Regarding subsidised employment programs, most of the empirical studies conclude that subsidised employment programs tend to improve the youth labor market. However regarding education/training programs, many econometric studies conclude that it is not clear if the programs shorten the youth unemployment duration and increase the probability of finding job in the short run. However in the long run, education/training programs provide the good future prospect for young participants. The proposal of this project is as follows. In order to combat youth unemployment in Japan, subsidised employment programs combined with education/training programs are the best policy combination. Less