Institutions and labor market outcomes in the Netherlands

In this paper we provide a description of the labor market in the Netherlands. Compared to other OECD countries labor force participation is high and the unemployment rate is low (also for young workers). Among the unemployed there are, however, relatively many long-term unemployed workers. Labor force participation of older workers is in­creasing but still low and Dutch workers have relatively low working hours. Disability is high, particularly among young individuals. We discuss the relevant labor market in­stitutions in the Netherlands and use recent reforms to assess the importance of the different reforms. Where possible we provide an international comparison. We find that inflow into benefits programs responds to (financial) incentives. The outflow is much more difficult to affect, in particular we could not find any evidence of substantial positive effects of active labor market programs (which are frequently offered in the Netherlands).

Keywords: institution, incentives, labor market reforms, participation, unemployment, disability.
JEL-codes: H21, H53, H55, J08, J21, J22, J26, J68