Pre-print, Working paper: We study active labor market policies (ALMP) in a matching model. ALMPs are modelled as a subsidy to job search. Workers di¤er in their productivity, and search takes place along an extensive margin. An additional job seeker a¤ects the quality of unemployed workers. As a result, the Hosios conditions are no longer valid. To replicate the optimum the worker share in bargaining must exceed the Hosios level, and one must impose a tax on job search activity. The coalition in favor of ALMP is also studied.