Active labour market policies, often shortened to ALMPs, are programs that try to improve employment outcomes directly. Instead of only replacing lost income, they help workers find jobs faster, gain skills, or become more attractive to employers.
How They Differ From Passive Policies
The contrast is with passive labour market policies such as unemployment benefits. Passive policies provide income support. Active policies try to change employment outcomes.
Typical ALMP tools include:
- job-search assistance and placement services,
- training and retraining,
- wage subsidies or hiring credits,
- apprenticeships,
- public works programmes.
How Economists Evaluate Them
The key question is not whether the programme sounds helpful, but whether it changes outcomes relative to what would have happened without it.
A standard evaluation object is the average treatment effect:
\[ ATE = \mathbb{E}[Y(1) - Y(0)] \]
where Y(1) is the outcome with the programme and Y(0) is the outcome without it.
Economists also ask whether the gains are short-lived, whether participants crowd out other workers, and whether the fiscal cost per sustained job is reasonable.
Why Results Differ Across Programmes
Some ALMPs work better than others. Job-search assistance is often cheaper and can raise placement rates quickly. Classroom training may help more over longer horizons. Wage subsidies can boost hiring, but they can also subsidize jobs that firms would have created anyway.
So the policy question is not “are ALMPs good?” but “which ALMP, for whom, and under what labor-market conditions?”