The Political Economy of Active Labour Market Policy for Young People : A comparative analysis of the effects of employers, employers’ organisations and collective training systems on the use of youth ALMPs in European countries between 1998 and 2014

Abstract

Active labour market policy (ALMP) is widely used in European countries to reduce youth unemployment and help young people in their transition from school into apprenticeships and employment. Spending on ALMP for young people varies significantly and in surprising ways across countries. However, so far there has been no research into what influences the level of public expenditure on different types of ALMPs for young people. In this PhD thesis, I attempt to fill this gap. Based on novel data, this thesis argues that spending on youth ALMP is influenced by other factors than ALMP for older people. Thereafter, it draws on the CPE literature on ALMP, collective training systems and business power, the sociological literature on school-to-work transitions and the economic literature on hiring decisions to develop a theory on how employers, pluralist and corporatist employer groups, and collective training systems (CTS) influence public expenditure on different types of youth ALMPs. This theory is then tested using a mixed-method approach combining a quantitative analysis of public expenditure on youth ALMPs between 1998 and 2014 in 28 European countries with a qualitative, process-tracing analysis of three country case studies: Germany, the United Kingdom, and Sweden. The evidence shows that employers and employer groups influence public expenditure on youth ALMPs through their structural and instrumental power. The findings regarding the effects of different forms of employer groups are mixed. There is qualitative evidence for corporatist employer organisations influencing the use of youth ALMPs in ways that pluralist groups do not, and quantitative evidence for countries with corporatist groups spending more on youth ALMPs. However, the results of the two levels of analyses do not match; the qualitative findings cannot explain the observed variation in spending. The results regarding the role of CTS are unambiguous: firm-based training is strongly and positively correlated with spending on youth ALMP, in particular on training measures. CTS influence policymakers’ ability to develop training ALMPs for young people and they make employer groups more likely to lobby for youth ALMPs to fight skills shortages or to support companies in training apprentices. Furthermore, CTS increase employers’ preferences for measures providing qualifications over work experience programmes. The findings highlight the influence of structural and institutional factors, while de-emphasising the effects of partisanship on the use of youth ALMP. The thesis’ central contribution is the exploration of a new field of study – the determinants of the use of ALMP for young people. In addition, it unearths hitherto unknown causal dynamics in this policy area including the effect of structural business power and CTS on the human capital orientation of ALMP. Moreover, the thesis develops a method for disaggregating ALMP expenditure by age group that can be used by future studies for the separate analysis of measures for young and older people.