06 July 2020

Job Transition Programs To Facilitate Progress

Economic progress means disruption and that creates pain. We could reduce that pain which would not only be a huge kindness but help to facilitate more progress. Some countries spend 2% of GDP on job transition programs. We spend 0.1%

Many European countries invest much more in their job transition programs than the United States. For the 2 percent of GDP Denmark spends on active labor market policies (training, job finding assistance, etc.), it gets high job-to-job mobility (going straight from one job to another) as well as lots of transitions in and out of employment. The rate of involuntary displacement is similar to that in other OECD countries, but the rate at which displaced workers find a job is much more rapid: three in four displaced workers find a new job within one year. Importantly, the Danish model survived the 2008 crisis and recession, with no large increase in involuntary unemployment at that time. Germany spends 1.45 percent of its GDP on active labor market policies, and this went up to 2.45 percent during the crisis, when unemployment was much higher than usual. In France, on the other hand, notwithstanding claims about how it wants to do more for the unemployed, expenditure on active labor market policies has been stuck at 1 percent of GDP for more than a decade. The corresponding measure for the United States is just 0.11 percent.
Banerjee, Abhijit V and Duflo, Esther. Good Economics for Hard Times (p. 314). PublicAffairs. Kindle Edition.

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