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The Impact of Active Labour Market Policy on Post-Unemployment Outcomes: Evidence from a Social Experiment in Denmark

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Author Info

  • Blasco, Sylvie

    ()
    (Department of Economics, Aarhus School of Business)

  • Rosholm, Michael

    ()
    (Department of Economics, Aarhus School of Business)

Abstract

While job search theory predicts that active labour market policies (ALMPs) can a ect post-unemployment outcomes, empirical evaluations investigating transition rates have mostly focused on the impact of ALMPs on exit rates from the current unemployment spell. We use a social experiment, which was conducted in Denmark in 2005-6, to investigate the e ects of a dramatic intensi cation of ALMPs on reemployment stability. We investigate the nature of this impact. We estimate a duration model with lagged duration dependence to separately identify \indirect" (via shorter unemployment duration) and \direct" (through a more ecient matching process) e ects of ALMPs on subsequent employment duration. We nd that overall intensive activation signi cantly reduces unemployment recurrence for men, but not for women. When we control for dynamic selection into employment and lagged duration dependence, the positive impact of the treatment becomes smaller but remains signi cant. 80% of the global impact of intensi cation acts through the direct channel for men.

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Bibliographic Info

Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 11-6.

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Length: 39 pages
Date of creation: 01 Mar 2011
Date of revision:
Handle: RePEc:hhs:aareco:2011_006

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Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Phone: +45 89 486396
Fax: +45 8615 5175
Web page: http://www.asb.dk/departments/nat.aspx
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Related research

Keywords: Social experiment; labour market policy regime; treatment effect; post-unemployment outcome; duration model; lagged duration dependence; dynamic selection;

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Cited by:
  1. Kenneth L. Sørensen, 2012. "Effects of Intensifying Labor Market Programs on Post-Unemployment Wages: Evidence From a Controlled Experiment," Economics Working Papers 2012-20, School of Economics and Management, University of Aarhus.
  2. Blasco, Sylvie & Pertold-Gebicka, Barbara, 2013. "Employment policies, hiring practices and firm performance," Labour Economics, Elsevier, vol. 25(C), pages 12-24.
  3. Maibom Pedersen, Jonas & Rosholm, Michael & Svarer, Michael, 2012. "Experimental Evidence on the Effects of Early Meetings and Activation," IZA Discussion Papers 6970, Institute for the Study of Labor (IZA).
  4. Vikström, Johan & Rosholm, Michael & Svarer, Michael, 2013. "The effectiveness of active labor market policies: Evidence from a social experiment using non-parametric bounds," Labour Economics, Elsevier, vol. 24(C), pages 58-67.

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