Active labour market policies (ALMPs) are government programmes that intervene in the labour market to help the unemployed find work. Many of these programmes grew out of earlier public works projects designed to combat widespread unemployment in the developed world during the interwar period. Today, academic analysis of ALMPs is associated with economists such as Lars Calmfors and Richard Layard. Demand side policies are policies used by the government to control the level of Aggregate demand (AD)
There are three main categories of ALMP:
Active labour market policies are prominent in the economic policy of the Scandinavian countries, although over the 1990s they grew in popularity across Europe. Notable examples include the New Deal in the UK and many welfare-to-work programmes in the US.
A number of authors (Boix 1998; Esping Andersen, 1990; Huo, Nelson et al. 2008) have argued that countries with stronger left wing political parties and trade unions have more developed ALMP. On the other hand, Social democratic parties may not promote ALMP if their constituents are well protected workers and hence face little risk of being unemployed (Rueda, 2007). More recently, the notion that different types of ALMP have similar political determinants has been contested (Bonoli, 2010; Vlandas, 2011, 2013).