Active Labor Market Policies, Funding Instability, and Labor Market Outcomes

This study investigates how instability in Active Labor Market Policies (ALMPs) and fluctuations in the corresponding budget allocations affect their overall effectiveness. Using dynamic panel regression models applied to 24 Tunisian regions over the period 2005–2015, the findings show that ALMPs contribute significantly to reducing unemployment. However, when the volatility of ALMP implementation and funding is taken into account, a clear moderating effect emerges: policy instability weakens the beneficial impact of ALMPs on unemployment. These results highlight the importance of consistent and predictable labor market interventions to ensure sustained improvements in employment outcomes.