LABOUR MARKET POLICY AND ASSOCIATION WITH PRODUCTIVITY

The paper deals with the issue of labour market policy and association with productivity. We focus our empirical analysis on the association between labour productivity growth and active as well as passive labour market policies for 20 EU Member States over the 2004-2013 period. Our econometric results based on the panel regression estimates suggest that expenditures for active and passive labour market policies positively relate to labour productivity growth (however, some estimates were statistically insignificant). Since from a theoretical perspective such association regarding expenditures for passive labour market policies may be doubtful, we additionally tested some hypothesis. We conclude, that countries with higher GDP per capita have higher expenditures for passive labour market policies. We have also examined potential detrimental effect of passive labour market policies and found negative correlation between variables expenditures for passive labour market policies and average annual hours actually worked per worker.