THE IMPACT OF COMPENSATION PAYMENTS ON EMPLOYMENT, IN REGIONAL STRUCTURES

Abstract

Compensation payments are considered active labour market policies designed to increase efficiency, to mitigate unemployment and to sustaining employment. We tested this hypothesis for the period 1993-2013, in territorial structures (42 counties) through a dynamic panel model (confirmed by Granger causality tests – Toda-Yamamoto version), and by means of error correction model. We found that the dynamics of regional employment are positively related to expenditure incurred for active policies and there are negatively correlated with the ratio between the unemployment average indemnity (and support allowance) and the average net nominal monthly salary earnings. But, the connexion between employment and compensation payments converges extremely slowly for a long-term stable relationship.

Keywords

• employment
• compensation payment
• dynamic panel models
• causality tests
• error correction model.