Active Labour Market Policy Expenditure: What Affects It? Evidence from Nine OECD Countries

The principal aim of this paper is to determine which inputs affect active labour market policy expenditure of nine OECD countries. After the theoretical insight, we have conducted an empirical analysis using data from 2000 to 2013 and applied the dynamic Arellano-Bond panel data model. We checked the robustness of our results by revising our dynamic Arellano-Bond model (by excluding correlated and non -significant variables) and comparing the results with the fixed-effects and random-effects data estimation model. Our results show that, from the practical standpoint, the expenditure on active labour market policy measures in the previous year has had the strongest impact on the expenditure in the following period We have noticed a change in factors that influence the expenditure from the pre-crisis to the post-crisis period General economic indicators (such as GDP) and labour market indicators play more important role in times of the economic crisis.