Active Labour Market Policies and Unemployment Convergence in Transition

Abstract

In this paper we approach the issue of social cohesion across local labour markets in Poland. We analyse regional dynamics of unemployment rates and try to evaluate the impact of Active Labour Market Policies (ALMPs) in observed trends. Using data from 1999 till 2008 we employ tools typically applied to income convergence analyses to test the stability of unemployment distribution - both unconditionally and taking into account explanatory power of unemployment structure and ALMPs in Polish regions. Results give no support to the hypothesis of unconditional convergence understood both in terms of levels and in terms of dispersion. Among the highest unemployment regions, however, data seem to suggest ”convergence of clubs”. The analysis included also accounting for potential impact of ALMPs, controlling for differentiated unemployment structure. We find no evidence that cohesion efforts contribute to more of the convergence or less of the divergence phenomena.