9 What works and for whom: A review of OECD coun- tries ’ experiences with active labour market policies

labour market programmes, both active and passive. The second sec-tion reviews the main findings from recent evaluations of active la-bour market programmes. At first sight, evaluation findings are not very encouraging, although there are some success stories. Counsel-ling and job-search appear to be particularly cost-effective active measures if they are combined with increased monitoring of job seek-ers and enforcement of work tests; significant impacts are often esti-mated for self-employment programmes which are appropriate for only a limited proportion of the unemployed, and hiring subsidies which suffer increasingly from dead-weight and substitution effects as they are expanded. At the same time, an evaluation focus on the post-programme impacts of active measures tells only part of the story. The third section of the paper first examines interactions between active and passive policies, including issues of benefit replacement rates and benefit eligibility conditions. It describes regular "interven-tions " in unemployment spells by the public employment service (PES) and the motivation effects which may arise when referrals to labour market programmes are made, citing some recent evidence on the effectiveness of these “activation ” measures. The importance of good management of the PES is highlighted, with a discussion of some recent attempts at improving its efficiency through the intro-duction of performance measurement and quasi-competitive mecha-nisms. The paper concludes that, although active labour market poli-cies are not a magic bullet, significant impacts on aggregate labour market outcomes can arise when appropriate strategies are adopted. JEL Classification: J68