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Evaluating the Effectiveness of Active Labor Programs in Hungary Upjohn Institute Technical Reports Upjohn Research home page 11-1-1998 Evaluating the Effectiveness of Active Labor Programs in Hungary Christopher J. O'Leary W.E. Upjohn Institute for Employment Research, [email protected] Upjohn Author(s) ORCID Identifier: https://orcid.org/0000-0002-3372-7527 Follow this and additional works at: https://research.upjohn.org/up_technicalreports Part of the Eastern European Studies Commons, and the Labor Economics Commons Citation O'Leary, Christopher J. 1998. "Evaluating the Effectiveness of Active Labor Programs in Hungary." Upjohn Institute Technical Report No. 98-013. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. https://doi.org/10.17848/tr98-013 This title is brought to you by the Upjohn Institute. For more information, please contact [email protected]. Evaluating the Effectiveness of Active Labor Programs in HUNGARY Upjohn Institute Technical Report No. 98-013 Christopher J. O’Leary November 1998 W.E. Upjohn Institute for Employment Research 300 South Westnedge Avenue Kalamazoo, Michigan 49007-4686 Evaluating the Effectiveness of Active Labor Programs in HUNGARY May 1998 Prepared for: International Labor Affairs Bureau U.S. Department of Labor Room S-5006 200 Constitution Ave., N.W. Washington, DC 20210 National Labor Center Konyves Kalman korut 48-52 Budapest, Hungary H-1087 Project Steering Committee World Bank 1818 H Street, N.W. Washington, DC 20433 Prepared by: Christopher J. O’Leary, Senior Economist W.E. Upjohn Institute for Employment Research 300 South Westnedge Avenue Kalamazoo, Michigan 49007 Evaluating the Effectiveness of Active Labor Programs in Hungary Table of Contents Section Page LIST OF FIGURES ............................................................v LIST OF MAPS ...............................................................v LIST OF TABLES .............................................................v ACKNOWLEDGMENTS ...................................................... xi EXECUTIVE SUMMARY ......................................................xiii 1. Introduction .............................................................1 1.1 Economic context of employment policy ..................................1 1.2 Administration of employment policy .....................................2 1.3 Aims of this report ..................................................2 2. An Overview of Employment Policy ...........................................7 2.1 Active labor programs ...............................................7 2.2 Passive labor programs ..............................................9 2.3 Use of labor programs ...............................................9 3. Sample Considerations ....................................................17 3.1 Sample size ......................................................17 3.2 Site selection .....................................................18 3.3 Sample selection ..................................................19 3.4 Survey implementation ..............................................19 3.5 Results of the survey effort ...........................................20 4. Evaluation of Retraining ...................................................39 4a.1 The samples for analysis of individual retraining ............................39 4a.2 Impact estimates of individual retraining on employment and earnings ............40 4a.3 A subgroup analysis of individual retraining impacts .........................42 4a.4 Net impacts of various individual retraining program features .................45 iii Table of Contents (Continued) Section Page 4a.5 The timing of response to individual retraining .............................47 4a.6 Impact of individual retraining on unemployment compensation costs ............49 4b.1 The samples for analysis of group retraining ...............................66 4b.2 Impact estimates of group retraining on employment and earnings ..............66 4b.3 A subgroup analysis of group retraining impacts ...........................68 4b.4 Net impacts of various group retraining program features .....................71 4b.5 The timing of response to group retraining ................................73 4b.6 Impact of group retraining on unemployment compensation costs ...............74 5. Evaluation of the Employment Service .........................................87 5.1 The samples for analysis of the employment service .........................88 5.2 Impact estimates of the employment service on employment and earnings ........89 5.3 A subgroup analysis of employment service assistance impacts ................91 5.4 Net impacts of various employment service features ........................94 5.5 The timing of response to employment service assistance .....................94 5.6 Impact of employment service assistance on unemployment compensation costs .....................................................95 6. Evaluation of Public Service Employment .....................................113 6.1 The samples for analysis of PSE ......................................113 6.2 Impact estimates of PSE on employment and earnings ......................114 6.3 A subgroup analysis of PSE impacts ...................................116 6.4 Net impacts of various PSE program features ...........................118 6.5 The timing of response to PSE .......................................119 6.6 Impact of PSE on unemployment compensation costs ......................120 7. Evaluation of the Wage Subsidy ............................................133 7.1 The samples for analysis of the wage subsidy ............................133 7.2 Impact estimates of the wage subsidy on employment and earnings ............134 7.3 A subgroup analysis of the wage subsidy impacts .........................136 7.4 Net impacts of various wage subsidy program features .....................138 7.5 The timing of response to the wage subsidy ..............................139 7.6 Impact of the wage subsidy on unemployment compensation costs ............141 8. Evaluation of Self-employment Assistance .....................................153 8.1 The samples for analysis of self-employment assistance .....................153 iv Table of Contents (Continued) Section Page 8.2 Impact estimates of self-employment assistance on employment and earnings .....154 8.3 A subgroup analysis of self-employment assistance impacts ..................156 8.4 Net impacts of various self-employment assistance program features ...........159 8.5 Some timing aspects of self-employment loan assistance ....................160 8.6 Impact of self-employment assistance on unemployment compensation costs .....161 Appendix A Questionnaires ...................................................177 Appendix B Notes on Evaluation Methodology ....................................219 REFERENCES ..............................................................231 LIST OF FIGURES Figure Page Figure 1.1 Unemployment Rate in Hungary 1990-96 .................................4 LIST OF MAPS Map Page Map 1.1 Unemployment Rate in All Counties of Hungary in April 1997 ..................6 Map 3.1 Counties Surveyed in Hungary ........................................23 LIST OF TABLES Table Page Table 1.1 Labor Market and Economic Conditions in Hungary, 1990-1996 ...............5 Table 2.1 Active Labor Programs in Hungary .....................................11 Table 2.2 Passive Labor Programs in Hungary ....................................12 Table 2.3 Nominal Spending on ALP and PLP in Hungary, 1990 to 1996 ...............13 Table 2.3.1 Spending in Share Terms on Active and Passive Labor Programs in Hungary, 1990-1996 .......................................14 v LIST OF TABLES (Continued) Table Page Table 2.4 Average Number of Participants in Labor Programs in Hungary, 1990 to 1996 ...............................................15 Table 2.5 Nominal Spending on ALPs and PLPs per Participant in Hungary, 1990 to 1996 ...............................................16 Table 3.1 Design of the Sampling Process for Evaluating ALPs in Hungary ...............22 Table 3.2 Comparative Statistics for Counties Surveyed in Hungary ....................24 Table 3.3 Number of Participants in the Four Main ALPs Within the 10 Selected Counties in 1995 ............................................25 Table 3.4 Money Allocated to the Four Main ALPs Within the 10 Selected Counties in 1995 ............................................26 Table 3.5 Cost per Participant of the Four Main ALPs Within the 10 Selected Counties in 1995 ............................................27 Table 3.6 Number of Participants in the Four Main ALPs Within the 10 Selected Counties in 1996 ............................................28 Table 3.7 Money Allocated to the Four Main ALPs Within the 10 Selected Counties in 1996 ............................................29 Table 3.8 Cost per Participant of the Four Main ALPs Within the 10 Selected Counties in 1996 ............................................30 Table 3.9.1 Sample Design and Survey Response in Hungary ..........................31 Table 3.9.2 Sample Sizes and Survey Response Rates in Hungary .......................32 Table 3.9.3 Comparison of Respondents and Non-Respondents Among the ALP Participant and Comparison Group Samples According to Their Composition by Age and Education in Percentage Terms ..........33 Table 3.10.1 Means of Exogenous Characteristics for the Comparison Group and ALP Participants in Hungary ....................................34 Table 3.10.2 Definitions
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