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Active Labor Market Programs and Reservation Wages: Its a Hazard

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  • Kennethh Lykke Sørensen

    (Department of Economics and Business Economics, Aarhus University, Denmark)

Abstract

Using a randomized controlled trial, this paper shows that positive earnings effects of labor market programs might be driven by an employment and/or a wage effect. The findings of this paper suggest that treated individuals in a high-intense scheme are more prone to have lowered short- term reservation wages compared to non-treated and thus accepts lower wages. In a less intense scheme with use of private providers, treated individuals are more likely to have gained formal human capital accumulation, and thereby raised reservation wages, which again might give rise to long-lasting effects.

Suggested Citation

  • Kennethh Lykke Sørensen, 2015. "Active Labor Market Programs and Reservation Wages: Its a Hazard," Economics Working Papers 2015-27, Department of Economics and Business Economics, Aarhus University.
    • Handle: RePEc:aah:aarhec:2015-27
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    File URL: https://repec.econ.au.dk/repec/afn/wp/15/wp15_27.pdf
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    References listed on IDEAS

    as
    1. Jaap H. Abbring & Gerard J. Van Den Berg, 2003. "The identifiability of the mixed proportional hazards competing risks model," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 65(3), pages 701-710, August.
    2. Sørensen, Kenneth Lykke, 2016. "Heterogeneous impacts on earnings from an early effort in labor market programs," Labour Economics, Elsevier, vol. 41(C), pages 266-279.
    3. Patrick Arni & Rafael Lalive & Jan C. Van Ours, 2013. "How Effective Are Unemployment Benefit Sanctions? Looking Beyond Unemployment Exit," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(7), pages 1153-1178, November.
    4. Blasco, Sylvie & Rosholm, Michael, 2011. "The Impact of Active Labour Market Policy on Post-Unemployment Outcomes: Evidence from a Social Experiment in Denmark," IZA Discussion Papers 5631, Institute of Labor Economics (IZA).
    5. Stephen G. Donald & David A. Green & Harry J. Paarsch, 2000. "Differences in Wage Distributions Between Canada and the United States: An Application of a Flexible Estimator of Distribution Functions in the Presence of Covariates," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(4), pages 609-633.
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    Cited by:

    1. Sørensen, Kenneth Lykke, 2016. "Heterogeneous impacts on earnings from an early effort in labor market programs," Labour Economics, Elsevier, vol. 41(C), pages 266-279.

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    More about this item

    Keywords

    Active labor market programs; randomized controlled trial; hourly wages; mixed proportional hazard models;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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