As recent decades have seen a growing interest in reforming advanced welfare states to promote employment, active labor market policy (ALMP) has emerged as a major topic of inquiry among comparative political economists. Whereas the literature to date disagrees on, and mostly downplays, the role of partisan politics in the development of ALMP, this dissertation shows that political actors systematically use ALMP programs in different ways to achieve distinct political aims. Drawing mostly on a rich, new panel data set on approximately 1,000 programs across Europe, the dissertation draws attention to several politically salient dimensions of ALMP that need to be taken seriously to understand how partisan politics matter in advanced industrial democracies.

Essay I reconciles the conflicting understandings of partisanship and ALMP in the ‘power resources’ and ‘insider/outsider’ schools by highlighting that ALMP programs may serve two overarching purposes. The essay shows that left-leaning governments are particularly inclined to expand programs designed primarily to reduce unemployment, whereas governments of all suits are equally supportive of programs that also, or instead, serve to increase labor supply.

Essay II focuses on employment subsidies, documenting how these may be designed to tackle different labor market challenges among different target groups. Emphasizing institutional path dependency, the essay then shows that cross-national variation in employment subsidy design broadly reflects the varying institutional regimes in different parts of Europe.

Essay III reconsiders the conventional view on the importance of employer involvement and corporatist institutions for ALMP by separating programs produced unilaterally by the state from programs, such as employment subsidies, produced jointly by the state and employers to the benefit of both. The essay finds that corporatist institutions primarily matter for ALMP by paving the way for governments—especially with business-friendly center-right parties—that favor joint over unilateral production.

The introductory essay argues that ALMP forms part of a larger family of economic policies that are sufficiently versatile to be sustained and used by actors across the political spectrum. Reviewing long-term trends in economic policy in OECD countries, it shows that these policies, which are here labelled micro-interventionist multi-tools, have expanded considerably since the early 1980s.