This paper seeks to answer the following question: what is the potential contribution which active labour market policies can make a part of a strategy to combat high and persistent unemployment and the problems of low pay and poverty among the working-age population? In order to answer this question, it is vital to know what works among active policies and in what circumstances. The OECD Secretariat has been working intensively on these questions in recent years and the paper summarises the main results of our work to date.

The structure of the paper is as follows. Section 2 provides some factual background on public spending on labour market policies in OECD countries over the past decade, drawing on an internationally comparable data set which the OECD has developed to monitor trends in this field of public spending. Then I summarise the main results of on-going OECD research into the effectiveness of active labour market policies. My review mainly exploits two sources: (i) the ...