EFFECTS OF MANPOWER POLICIES ON DURATION DEPENDENCE IN REEMPLOYMENT RATES - THE EXAMPLE OF SWEDEN

In contrast to the evidence from other countries, Swedish studies of the transition from unemployment to employment have consistently reported a non-negative duration dependence in the hazard. This study examines the extent to which this results from large scale labour market programmes, a limited duration of unemployment benefits, or differences among available jobs. The labour market programmes are here found to be the primary factor behind the earlier Swedish results. The programmes thus pick up those with the worst employment prospects, thereby postponing a decrease in the re-employment probability among job searchers. This in turn generates an on 'average' constant duration dependence.