Impact Evaluation : Techniques for Evaluating Active Labor Market Programs

Abstract

Over the past 40 years, "active" labor market programs (ALMPs) have emerged as an important employment policy tool. Their objective is primarily economic - to increase the probability that the unemployed will find jobs or that the underemployed will increase their productivity and earnings. ALMPs include job search assistance, training and retraining, and job creation programs (public works, micro-enterprise development, and wage subsidies). With economic reform, increasing liberalization of markets and growing concerns about the problems of unemployment, ALMPs have increasingly become an attractive option for policymakers. Expenditure on these programs has, however, not increased substantially over the 1990s, remaining fairly constant at around 0.7% of GDP. This reflects to some extent the ambivalence of policymakers about the effectiveness of ALMPs. A frequently asked question is, "Are these programs effective?" This note will focus on impact evaluations of ALMPs. It will discuss the objectives and importance of rigorous evaluations, highlight commonly used impact evaluation techniques, and discuss who should conduct evaluations.