At a virtual presentation on January 21, 2026, organized by the Institute of Public Finance, Osama Shaikh (Hacettepe University, Ankara, Türkiye) presented an article, co-authored with Selcen Ozturk, published in the journal Public Sector Economics that investigates the effects of labour market spendings on unemployment dynamics across demographics groups, with particular attention to persistent youth unemployment, in 36 OECD countries between 2004 and 2022.

Employing second-generation panel cointegration techniques, the analysis shows that activation policies without employment maintenance incentives are associated with higher unemployment, especially among young people, reflecting transitional and participation effects. In contrast, institutional and public training expenditures significantly reduce youth unemployment, highlighting the importance of skill formation and effective school-to-work transitions. Minimum income benefits and higher wages are found to increase adult and total unemployment, pointing to potential disincentive effects and wage rigidities.

Robustness checks across different welfare regimes and during major economic crises confirm that the effects of labour market policies are highly context-dependent rather than uniform. Overall, the findings stress the need for carefully calibrated, age-specific labour market strategies that combine activation measures, targeted training, and balanced income support to promote inclusive and resilient labour markets.

Presentation was moderated by Anja Špoljarić, researcher at the Institute of Public Finance. A recording and the presentation are available.

Photo: Unsplash