Exploring activation: A cross-country analysis of active labour market policies in Europe

Over recent decades, a wide literature has been devoted to the analysis of the evolution of Labour Markets Policies in the so-called “Activation paradigm” (Bonoli, 2010). Existing contributions are mainly based on qualitative case-studies or cross-country empirical analyses aimed at investigating the determinants of national expenditure. By adopting a multivariate strategy based on the integrate implementation of Principal Component Analysis and Cluster Analysis, this paper provides an innovative study on the evolution and composition of Labour Market Policies in 14 EU countries (1991-2015). Results highlight an increasing heterogeneity in countries’ expenditure behaviours until the economic crisis and a significant reduction of differences in the aftermath of 2008. Moreover, the empirical analysis allows to identify clusters and latent spending behaviours (human capital investment and pro-market orientation) that support and enrich the literature on types and latent dimensions of Activation expenditure.