On the new methodology of cost‐benefit analysis of ALMP – The case of Serbia

Zubović, Jovan and Simeunović, Ivana (2012) On the new methodology of cost‐benefit analysis of ALMP – The case of Serbia. In: New challenges in changing labour markets. Institute of Economic Sciences, Belgrade, pp. 95-111. ISBN 978-86-80315-93-5

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Abstract

Active labour market policies are commonly used tool to fight unem‐ ployment. In the late 1970s in most developed countries of OECD government ex‐ penditures 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. Evalua‐ tions 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 test‐ ed 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 ap‐ proach 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 aggre‐ gate 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 re‐ turns. Our findings say that in 2008 there has been a net gain of € 269 million and in 2009 € 166 million in tax returns collected.

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