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Table 1 Regression results on labour market variables

From: Are active labour market policies effective in activating and integrating low-skilled individuals? An international comparison

Part 1 Unemployment rate Low-skilled unemployment rate Employment rate
  OLS (fe) (1) FGLS (AR1) (2) IV (3) OLS (1) FGLS (AR1) (2) IV (3) OLS (1) FGLS (AR1) (2) IV (3)
Training (policy 1) − 0.92*** − 1.09*** − 1.78*** − 1.08** − 1.16*** − 1.00 − 0.02 0.03 1.71***
(0.25) (0.21) (0.55) (0.44) (0.42) (0.87) (0.21) (0.19) (0.58)
Employment incentives (policy 2) − 1.63*** − 1.21*** − 1.19** − 2.14*** − 1.81*** − 2.09** 1.64*** 1.01*** 1.44**
(0.37) (0.31) (0.52) (0.74) (0.63) (0.97) (0.37) (0.29) (0.59)
Cluster (policy 3) − 1.96*** − 1.80*** − 1.61*** − 2.17*** − 2.34*** − 2.17** 0.45** 0.24 1.95***
(0.23) (0.22) (0.54) (0.42) (0.41) (0.94) (0.21) (0.19) (0.65)
Start-up incentives (policy 4) − 7.96*** − 5.48*** − 2.75*** − 7.78*** − 7.07*** − 5.11*** 0.86 1.40** 3.22***
(0.88) (0.75) (1.04) (1.54) (1.40) (1.71) (0.73) (0.60) (0.88)
PES allocation − 0.08*** − 0.05*** − 0.10*** 0.03 0.00 0.06 0.01 0.01 0.04*
(0.01) (0.01) (0.02) (0.03) (0.03) (0.04) (0.01) (0.01) (0.02)
Continuity in implementation 0.01 0.01 − 0.41*** 0.37*** 0.14** − 1.00*** 0.22*** 0.12*** 0.35***
(0.01) (0.01) (0.07) (0.09) (0.06) (0.14) (0.04) (0.03) (0.06)
Correct timing of policies   − 10.85*** − 0.01   − 5.24 2.14   9.54*** − 0.63
  (2.06) (1.58)   (4.37) (2.95)   (2.01) (1.76)
Training * PES allocation − 0.03*** − 0.03*** − 0.00 − 0.04* − 0.06*** − 0.10*** 0.04*** 0.02** 0.06***
(0.01) (0.01) (0.01) (0.02) (0.02) (0.02) (0.01) (0.01) (0.01)
Employment incentives * PES allocation − 0.03* − 0.03** − 0.03 − 0.01 − 0.03 − 0.01 − 0.04*** − 0.02* 0.01
(0.02) (0.01) (0.03) (0.03) (0.03) (0.04) (0.02) (0.01) (0.02)
ALMPs * timing 1.13*** 1.10*** 0.86** 1.23*** 1.44*** 1.46** − 0.33** − 0.14 − 1.58***
(0.15) (0.15) (0.37) (0.30) (0.29) (0.64) (0.15) (0.14) (0.44)
Cycle * timing 0.00 − 0.00 − 0.00*** 0.00 0.00 − 0.00*** − 0.00 0.00 0.00
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Terms of trade − 0.01 − 0.01 0.01 − 0.01 0.00 0.12*** − 0.01 − 0.01 0.05***
(0.01) (0.01) (0.01) (0.03) (0.03) (0.03) (0.01) (0.01) (0.02)
Population with tertiary education 0.04*** 0.03** 0.02 0.03 0.05* − 0.01 − 0.90*** − 0.86*** − 0.71***
(0.01) (0.01) (0.02) (0.03) (0.03) (0.03) (0.06) (0.06) (0.09)
Union density 0.21*** 0.21*** 0.03*** 0.25*** 0.23*** 0.07*** − 0.15*** − 0.14*** 0.02
(0.03) (0.03) (0.01) (0.07) (0.07) (0.02) (0.03) (0.03) (0.01)
EPL for temporary workers − 0.59*** − 0.32 0.38* − 1.75*** − 1.04** − 1.28*** − 0.09 0.06 − 0.34
(0.20) (0.20) (0.20) (0.49) (0.45) (0.36) (0.21) (0.19) (0.25)
EPL for regular workers 1.37** 0.30 − 0.59** − 0.49 − 0.23 − 0.61 − 1.21** − 1.03** 1.76***
(0.55) (0.52) (0.29) (1.17) (1.07) (0.44) (0.58) (0.49) (0.29)
Gross replacement rate 0.07*** 0.10*** 0.08*** 0.04 0.05 0.08** − 0.04** − 0.06*** − 0.02
(0.02) (0.02) (0.02) (0.04) (0.04) (0.04) (0.02) (0.02) (0.03)
EU   − 6.87*** 3.16***   − 2.40 − 7.22***   12.15*** − 2.24***
  (2.08) (0.58)   (4.39) (1.66)   (2.02) (0.74)
Time effects Yes Yes Yes Yes Yes Yes Yes Yes Yes
Country effects Yes Yes Yes Yes Yes Yes Yes Yes Yes
Observationsa 459 458 323 341 340 303 373 372 332
R-squared 0.85 0.68 0.91 0.79 0.97 0.90
Hansen J-test (p-value) 0.30 0.10 0.66
Part 2 Low-skilled employment rate LFPR Low-skilled LFPR
  OLS (fe) (1) FGLS (AR1) (2) IV (3) OLS (1) FGLS (AR1) (2) IV (3) OLS (1) FGLS (AR1) (2) IV (3)
Training (policy 1) − 0.23 − 0.04 2.82** 0.12 0.05 0.64*** − 0.94** − 0.77** 0.93
(0.43) (0.41) (1.42) (0.08) (0.08) (0.11) (0.38) (0.37) (1.43)
Employment incentives (policy 2) 2.33*** 1.71*** 4.50*** − 0.08 0.06 − 0.10 1.23* 0.57 3.35**
(0.71) (0.61) (1.42) (0.16) (0.13) (0.17) (0.64) (0.54) (1.34)
Cluster (policy 3) 1.66*** 1.63*** 5.72*** − 0.14** − 0.04 − 0.32*** 0.59 0.37 3.21**
(0.41) (0.40) (1.46) (0.06) (0.05) (0.08) (0.37) (0.36) (1.59)
Start-up incentives (policy 4) 5.00*** 4.62*** 9.15*** 0.18 0.26 − 1.67 1.00 0.79 7.52**
(1.49) (1.35) (2.75) (0.82) (0.64) (1.30) (1.33) (1.21) (2.97)
PES allocation − 0.03 0.00 0.14** − 0.05*** − 0.03*** − 0.01 − 0.06** − 0.03 0.16***
(0.03) (0.03) (0.06) (0.01) (0.01) (0.01) (0.03) (0.02) (0.05)
Continuity in implementation 0.16** 0.12*** 0.63*** 0.23*** 0.10*** 0.31*** 0.05 0.03 0.36***
(0.06) (0.04) (0.16) (0.04) (0.03) (0.03) (0.08) (0.05) (0.12)
Correct timing of policies   − 0.24 5.16   3.68** − 6.40***   − 5.85 1.83
  (4.24) (3.83)   (1.86) (0.60)   (3.83) (3.92)
Training * PES allocation 0.10*** 0.09*** 0.14***     0.08*** 0.06*** 0.12***
(0.02) (0.02) (0.04)     (0.02) (0.02) (0.04)
Employment incentives * PES allocation − 0.06* − 0.04 − 0.06     − 0.08*** − 0.05** − 0.11*
(0.03) (0.03) (0.07)     (0.03) (0.03) (0.06)
ALMPs * timing − 0.95*** − 0.93*** − 4.01***     − 0.35 − 0.16 − 2.40**
(0.29) (0.29) (0.99)     (0.26) (0.26) (1.08)
Cycle * timing − 0.00*** − 0.00* 0.00     − 0.00*** − 0.00** − 0.00
(0.00) (0.00) (0.00)     (0.00) (0.00) (0.00)
Terms of trade 0.10*** 0.08*** − 0.26*** 0.00 0.00 0.06*** 0.08*** 0.07*** − 0.20***
(0.03) (0.03) (0.04) (0.01) (0.01) (0.02) (0.03) (0.03) (0.05)
Population with tertiary education 0.01 − 0.01 0.01 0.02 0.00 0.03** 0.03 0.00 0.05
(0.03) (0.03) (0.05) (0.01) (0.01) (0.01) (0.02) (0.02) (0.04)
Union density − 0.03 − 0.13** 0.03 − 0.02 − 0.03 0.05*** 0.14** 0.04 0.05*
(0.07) (0.06) (0.03) (0.03) (0.03) (0.01) (0.06) (0.06) (0.03)
EPL for temporary workers − 0.23 − 0.44 1.66*** − 0.74*** − 0.41** − 0.18 − 0.99** − 0.87** 1.83***
(0.48) (0.44) (0.59) (0.25) (0.20) (0.25) (0.43) (0.39) (0.62)
EPL for regular workers − 0.59 − 0.27 3.73*** − 0.42 − 0.48 1.10*** − 0.96 − 0.53 2.90***
(1.12) (1.00) (0.80) (0.59) (0.47) (0.24) (1.02) (0.93) (0.72)
Gross replacement rate − 0.06 − 0.05 0.26*** − 0.05*** − 0.05*** 0.01 − 0.03 − 0.01 0.41***
(0.04) (0.04) (0.07) (0.02) (0.02) (0.02) (0.03) (0.04) (0.07)
EU   − 7.44* 16.02***   6.65*** − 2.34**   − 11.76*** 16.76***
  (4.19) (2.38)   (1.96) (0.96)   (3.89) (2.09)
Time effects YES YES YES YES YES YES YES YES YES
Country effects YES YES YES YES YES YES YES YES YES
Observationsa 335 334 295 343 342 319 331 330 317
R-squared 0.97 0.74 0.96 0.84 0.97 0.72
Hansen J test (p value) 0.18 0.13 0.11
  1. Notes: Figures in parentheses are standard errors. Significance levels: *significant at 10%; **significant at 5%; ***significant at 1%. (1) OLS with fixed effects; (2) FGLS with AR1 correction; and (3) 2SLS using as instruments the past values of the endogenous policy variables: training, policy cluster and continuity in implementation. The Hansen J test assesses the validity of instruments (in an over identified context) and their exclusion restrictions. The joint null hypothesis is that the instruments are uncorrelated with the error term and that the excluded instruments are correctly excluded from the estimated equation (Baum et al. 2007)
  2. aThe final analysis is based on 27 countries. Israel has been dropped from all regressions due to total unavailability of information about union density and GRR. Estonia, Mexico and Slovenia have also been dropped because of total unavailability of information about GRR. Finally, Luxembourg was dropped from the FGLS (AR1) regression because of lack of time variation in EPL values