Active Turn Of Labor Market Policy And Its Typology In Welfare States

In welfare states, labor market policies (LMPs) are important policy fields and key policy instruments. With the decreasing capability of passive labor market policies (PLMPs), welfare states are increasingly inclined to use active labor market policies (ALMPs) to make labor be well-prepared and competitive in the context of changing knowledge economy. After the World War II, a big trend in labor market policy is turning from passive to active. However, it is very dangerous to neglect the difference of ALMPs in welfare states though we have observed this active turn. In fact, ALMPs have different types in various welfare states.Focusing on active turn of LMPs in welfare states, main research questions in this paper are:(1) Active turn process of LMPs in welfare states; (2) Policy mix and its typology of ALMPs in welfare states; (3) Case study on typology of ALMPs in three selected welfare states;(4) Current situation and future reform of LMPs in China.We firstly draw a big developmental picture of LMPs after World War II. On the one hand, we delineate the labor market policy development after World War II through qualitative method. On the other hand, our paper demonstrates the active turn through quantitative way by using LMPs expenditure. In the following part, this paper analyzes welfare state from a new perspective:typology of ALMPs. We divide ALMPs into three types:Types I (human capital investment), Type Ⅱ (preventing human capital dissipation) and Type III (convenience of re-entry into labor market), which are the independent variables of active labor market policy regime in welfare states. Accordingly, this paper divides 21 OECD countries into 3 groups via hierarchical cluster analysis and K cluster analysis. Three groups have different policy mix in the field of ALMPs while an obviously advantageous policy type can also be observed in each group:In Group I (marginal states), public financial expenditure on ALMPs remains low, mainly relies on market approaches to provide labor market services; in Group II (Human capital investment states), government pays more attention to labor market training and combination of education and training, which can be considered as an upstream intervention; in Group III (re-enter LM states), government strives for employment incentives while providing high quality public employment service. Followed by the typology analysis, this paper selects one textbook example in each group to deepen our study. At last, our focus comes back to LMP of China. We expect to come up with some possible recommendation based on the big trend of LMPs and good practice of welfare states.Our main conclusions are:(1) After World War Ⅱ, LMPs in welfare states experienced an active turn. Furthermore, our paper figures out a pathway of ALMPs in welfare states based on trichotomy mentioned above:Type III plays an increasingly crucial role while Type II gradually loses its prominence and Type I have an average performance. (2) We divide 21 OECD countries in to 3 groups based on hierarchical cluster and K cluster analysis. Australia is the representative of Group I (marginal states):public financial expenditure remains at a low level while labor market services are guaranteed by mature quasi-market mechanism. Finland is taken as an example of Group II (Human capital investment states) which characterized by extensive trans-departmental cooperation and a well-combined education and training system. In Group III (re-enter LM state), government constructs a complete job searching system and orderly completion under the premise of rights and duties, like Germany. (3) In China, ALMPs develop at an early stage:total expenditure is still low and type II has its prominence that is contrary to the pathway and experience of welfare states.Based on the big trend and good practice of welfare states and also China’s current situation, our policy recommendation lies in:Strengthening the dominant role of government in labor market services; developing for-profits and non-profits engaging in labor market services provision, building up multi-sector provision model; establishing an effective as well as long-lasting job searching mechanism.