ABSTRACT
Labour market has a central function in most welfare states. Following a brief introduction to labour markets, this chapter will focus on Active Labour Market Policies (ALMPs) which consist mainly of educational and employment incentives offered to the unemployed. ALMPs aim to relieve or prevent the negative effects that spells of unemployment often bring about for the individual as well as for the labour market as a whole. The subject that researchers continually investigate is whether or not participation in ALMPs is fruitful. This chapter shows that it is difficult to make universal statements about this because the success of ALMPs seems to vary as a consequence of how they are designed, individual heterogeneity among participants and methodological issues. Nevertheless, despite the difficulty in drawing conclusions, some general tendencies with regard to the supply of ALMPs and subsequent micro-level effects of ALMPs will be highlighted.
