The design of active labour market policies: building in effective incentives

A first objective of this paper is to emphasise the role of a correct diagnosis of unemployment persistence for the design of effective active labour market policies. A second is to stress the importance of adequate incentives to programme administrators of active labour market policies, and that this may well be more important than providing adequate incentives to the unemployed. To illustrate this, we summarise two case studies evaluating active labour market policies in Belgium. The first one evaluates a work experience programme for welfare recipients. The second one analyses the short-term effect of vocational training programmes for unemployed workers on the probability of leaving unemployment. Finally, we invite economists to think harder about well designed performance-standards systems. We provide some guidelines for this research programme.A first objective of this paper is to emphasise the role of a correct diagnosis of unemployment persistence for the design of effective active labour market policies. A second is to stress the importance of adequate incentives to programme administrators of active labour market policies, and that this may well be more important than providing adequate incentives to the unemployed. To illustrate this, we summarise two case studies evaluating active labour market policies in Belgium. The first one evaluates a work experience programme for welfare recipients. The second one analyses the short-term effect of vocational training programmes for unemployed workers on the probability of leaving unemployment. Finally, we invite economists to think harder about well designed performance-standards systems. We provide some guidelines for this research programme.A