Labor market policies and unemployment in the Czech Republic

We analyze the impact of the active labor market policies (ALMPs) and the u nemployment compensation system (UCS) on unemployment durations of differen t groups in the Czech population by estimating hazard functions with new mi croeconomic data. We conclude that these programs were effective in improvi ng the functioning of the labor market. The UCS system has allowed the unem ployed to search for jobs but has not prolonged unduly unemployment spells. This analysis of the effectiveness of ALMPs on unemployment durations show s that job brokering shortened spells of the groups that tended to have lon ger unemployment durations, i.e., women, Romanies, the handicapped, less ed ucated persons, and those with an unemployment history. Our results suggest that the UCS and the ALMPs increased the social acceptability of the painf ul economic transition. J. Comp. Econom., March 1999, 27(1), pp. 33-60. Wil liam Davidson Institute, University of Michigan Business School, 701 Tappan Street, Ann Arbor, Michigan 48109-1234; and CERGE-EI, 11121 Prague 1, Czec h Republic. (C) 1999 Academic Press. Journal of Economic Literature Classif ication Numbers: C41, H53, J23, J64, O15, P2.