The employment and unemployment effects of Finnish active labour market programmes

The persistence of high unemployment has placed increasing stress on the role of \nactive labour market policies. They have been seen as the main policy tool in moving individuals \nfrom income support to employment. This thesis attempts to evaluate the effectiveness \nof active labour market policy in fulfilling the difficult task given to it. This is \ndone by empirically exploring the impact of active labour market programmes on the \noverall level of open unemployment, participants' repeat unemployment incidence and \ntheir subsequent employment record. By this means, the thesis examines the achievement \nof both macroeconomic and individual goals given to active labour market policy. \nThe main finding running through all chapters, and consequently through different estimation \nmethods, samples and aggregation levels, is that active labour market policy improves \nthe employment performance of the economy but it can help only so far as it \ngoes. The beneficial effect remains far too limited to bring down the current high levels \nof unemployment or to wipe out the gap in labour market possibilities prevailing between \nadvantaged and disadvantaged individuals. This is not to say that active labour \nmarket policy would not be useful in conjunction with other policies affecting unemployment, \nbut without any support its effects will remain modest.