- Volume 63 Issue 3
This study examines the effects of active labor market policy on unemployment by pooled cross-section time series analysis utilizing panel data of 18 OECD countries, and seeks implications for improvements of the Korean active labor market policy. The results of the analysis are summarized as follows. First, active labor market policy negatively affects unemployment rates. Second, vacational training program among three major active labor market programs has a negative effect on unemployment rates. Third, employment service program and employment subsidy program have partially negative effects on unemployment rates. The implications for the Korean active labor market policy are as follows. First, it is necessary to expand and systematize active labor market policies. Second, vocational training programs should be systematized and professionalized according to labor demand. Third, employment subsidy programs need to be planned and carried out under the condition of minimizing a substitution effect, a displacement effect and a deadweight loss effect. Fourth, employment service programs need to be developed and carried out under the consideration of not only the reduction of unemployment rates but also the prevention of re-unemployment, mitigation of income inequality and improvement of productivity.