On the New Methodology of Cost‐Benefit Analysis of ALMP – The Case of Serbia

NEW CHALLENGES IN CHANGING LABOUR MARKETS, p. 95, Institute of Economic Sciences, Belgrade, 2012

17 Pages Posted: 8 Nov 2012 Last revised: 5 May 2014

See all articles by Jovan Zubovic

Jovan Zubovic

Economics Institute

Ivana Simeunović

Belgrade Banking Academy

Date Written: March 15, 2012

Abstract

Active labour market policies are commonly used tool to fight unemployment. In the late 1970s in most developed countries of OECD government expenditures on those policies reached up to 1.5% of GDP. This created a need to evaluate the impact of such measures and perform cost‐benefit analyses. Evaluations have in the previous 30 years been undertaken by using several methods: experimental and quasi‐experimental, measurements and evaluations of processes performance, micro and macro analyses. In this paper we have presented and tested a modified approach of cost‐benefit analysis of ALMP viewed as an investment made by a government. The goal was to determine whether by using such an approach it is possible to provide new information to policy makers and to deepen research and further develop a methodology which will be robust enough to serve as a proof of ALMP effectiveness. Initial results of the empirical research in Serbia show very positive results, indicating that especially in the period of recessions, active measures can significantly improve labour market conditions, thus create high levels of return to investments (taking ALMP as an investment). Using aggregate data on all persons being registered as unemployed at the beginning of 2008 and 2009, we have tested how the ALMP impact the potential growth of tax returns. Our findings say that in 2008 there has been a net gain of € 269 million and in 2009 € 166 million in tax returns collected.

Keywords: Active policies, evaluation, unemployment

JEL Classification: J68, E24

Suggested Citation

Zubovic, Jovan and Simeunović, Ivana, On the New Methodology of Cost‐Benefit Analysis of ALMP – The Case of Serbia (March 15, 2012). NEW CHALLENGES IN CHANGING LABOUR MARKETS, p. 95, Institute of Economic Sciences, Belgrade, 2012, Available at SSRN: https://ssrn.com/abstract=2172918

Jovan Zubovic (Contact Author)

Economics Institute ( email )

16, Kralja Milana str.
Belgrade, 11000
Republic of Serbia

Ivana Simeunović

Belgrade Banking Academy ( email )

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