IDEAS home Printed from https://ideas.repec.org/p/iaw/iawdip/125.html
   My bibliography  Save this paper

Fast track to the labour market or highway to hell? The effect of activation policies on quantity and quality of labour market integration

Author

Listed:
  • Lukas Fervers

Abstract

Activation policies such as sanctions, workfare employment and counselling and monitoring schemes have been found to speed up labour market reintegration. At the same time, it has been suspected that this quicker reintegration is paid for with worse job quality, e.g. in terms of lower wages. I contribute to this discussion by analysing the effects of a workfare (counselling and monitoring) scheme from Germany on employment probability and post-unemployment wages via regression-adjusted matching estimations. This scheme tightens behavioural requirements for unemployed workers but also offers support in terms of more intense counselling. The results point to a strongly positive effect on employment probability but no effect on wages. They are robust to changes in the matching algorithm, and placebo tests refute concerns about endogenous selection or substitution effects. These findings contrast the results from previous research on sanctions, which confirmed a negative effect on job quality. This puzzle suggests that the existence of adverse effects on job quality depends on the type of activation programme. While it may indeed be there for very intense kinds of activation, it can be avoided if the right balance between pressuring and supportive components is found.

Suggested Citation

  • Lukas Fervers, 2016. "Fast track to the labour market or highway to hell? The effect of activation policies on quantity and quality of labour market integration," IAW Discussion Papers 125, Institut für Angewandte Wirtschaftsforschung (IAW).
    • Handle: RePEc:iaw:iawdip:125
    as

    Download full text from publisher

    File URL: http://www.iaw.edu/RePEc/iaw/pdf/iaw_dp_125.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Giuliano Bonoli, 2010. "The Political Economy of Active Labor-Market Policy," Politics & Society, , vol. 38(4), pages 435-457, December.
    2. Gerard J. van den Berg & Bas van der Klaauw & Jan C. van Ours, 2004. "Punitive Sanctions and the Transition Rate from Welfare to Work," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 211-241, January.
    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. Betsy Sinclair & Margaret McConnell & Donald P. Green, 2012. "Detecting Spillover Effects: Design and Analysis of Multilevel Experiments," American Journal of Political Science, John Wiley & Sons, vol. 56(4), pages 1055-1069, October.
    5. Torben M. Andersen & Michael Svarer, 2014. "The Role of Workfare in Striking a Balance between Incentives and Insurance in the Labour Market," Economica, London School of Economics and Political Science, vol. 81(321), pages 86-116, January.
    6. Bennmarker, Helge & Skans, Oskar Nordström & Vikman, Ulrika, 2013. "Workfare for the old and long-term unemployed," Labour Economics, Elsevier, vol. 25(C), pages 25-34.
    7. Guido W. Imbens, 2015. "Matching Methods in Practice: Three Examples," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 373-419.
    8. Rafael Lalive & Jan C. van Ours & Josef Zweimüller, 2005. "The Effect Of Benefit Sanctions On The Duration Of Unemployment," Journal of the European Economic Association, MIT Press, vol. 3(6), pages 1386-1417, December.
    9. Alberto Abadie & Guido W. Imbens, 2011. "Bias-Corrected Matching Estimators for Average Treatment Effects," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 29(1), pages 1-11, January.
    10. Hillmann, Katja & Hohenleitner, Ingrid, 2015. "Impact of welfare sanctions on employment entry and exit from labor force: Evidence from German survey data," HWWI Research Papers 168, Hamburg Institute of International Economics (HWWI).
    11. Nickerson, David W., 2008. "Is Voting Contagious? Evidence from Two Field Experiments," American Political Science Review, Cambridge University Press, vol. 102(1), pages 49-57, February.
    12. Martin Biewen & Bernd Fitzenberger & Aderonke Osikominu & Marie Paul, 2014. "The Effectiveness of Public-Sponsored Training Revisited: The Importance of Data and Methodological Choices," Journal of Labor Economics, University of Chicago Press, vol. 32(4), pages 837-897.
    13. Katz, Lawrence F. & Meyer, Bruce D., 1990. "The impact of the potential duration of unemployment benefits on the duration of unemployment," Journal of Public Economics, Elsevier, vol. 41(1), pages 45-72, February.
    14. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    15. Ashenfelter, Orley & Ashmore, David & Deschenes, Olivier, 2005. "Do unemployment insurance recipients actively seek work? Evidence from randomized trials in four U.S. States," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 53-75.
    16. Bruno Crépon & Esther Duflo & Marc Gurgand & Roland Rathelot & Philippe Zamora, 2013. "Do Labor Market Policies have Displacement Effects? Evidence from a Clustered Randomized Experiment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(2), pages 531-580.
    17. Gerard J. van den Berg & Bas van der Klaauw, 2006. "Counseling And Monitoring Of Unemployed Workers: Theory And Evidence From A Controlled Social Experiment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(3), pages 895-936, August.
    18. Burdett, Kenneth, 1979. "Unemployment Insurance Payments as a Search Subsidy: A Theoretical Analysis," Economic Inquiry, Western Economic Association International, vol. 17(3), pages 333-343, July.
    19. Iacus, Stefano M. & King, Gary & Porro, Giuseppe, 2012. "Causal Inference without Balance Checking: Coarsened Exact Matching," Political Analysis, Cambridge University Press, vol. 20(1), pages 1-24, January.
    20. Alberto Abadie & Guido W. Imbens, 2006. "Large Sample Properties of Matching Estimators for Average Treatment Effects," Econometrica, Econometric Society, vol. 74(1), pages 235-267, January.
    21. Douglas J. Besharov, 2009. "Presidential address: From the Great Society to continuous improvement government: Shifting from “does it work?” to “what would make it better?”," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 28(2), pages 199-220.
    22. Kluve, Jochen, 2010. "The effectiveness of European active labor market programs," Labour Economics, Elsevier, vol. 17(6), pages 904-918, December.
    23. Keele, Luke, 2015. "The Statistics of Causal Inference: A View from Political Methodology," Political Analysis, Cambridge University Press, vol. 23(3), pages 313-335, July.
    24. Marco Caliendo & Konstantinos Tatsiramos & Arne Uhlendorff, 2013. "Benefit Duration, Unemployment Duration And Job Match Quality: A Regression‐Discontinuity Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(4), pages 604-627, June.
    25. Graversen, Brian Krogh & van Ours, Jan C., 2008. "How to help unemployed find jobs quickly: Experimental evidence from a mandatory activation program," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 2020-2035, October.
    26. Cockx, Bart & Dejemeppe, Muriel, 2012. "Monitoring job search effort: An evaluation based on a regression discontinuity design," Labour Economics, Elsevier, vol. 19(5), pages 729-737.
    27. Heckman, J.J. & Hotz, V.J., 1988. "Choosing Among Alternative Nonexperimental Methods For Estimating The Impact Of Social Programs: The Case Of Manpower Training," University of Chicago - Economics Research Center 88-12, Chicago - Economics Research Center.
    28. Bas Van der Klaauw & Jan C. Van Ours, 2013. "Carrot And Stick: How Re‐Employment Bonuses And Benefit Sanctions Affect Exit Rates From Welfare," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(2), pages 275-296, March.
    29. DUNCAN McVICAR, 2010. "Does Job Search Monitoring Intensity Affect Unemployment? Evidence from Northern Ireland," Economica, London School of Economics and Political Science, vol. 77(306), pages 296-313, April.
    30. Huber, Martin & Lechner, Michael & Wunsch, Conny, 2013. "The performance of estimators based on the propensity score," Journal of Econometrics, Elsevier, vol. 175(1), pages 1-21.
    31. Martin Huber & Michael Lechner & Andreas Steinmayr, 2015. "Radius matching on the propensity score with bias adjustment: tuning parameters and finite sample behaviour," Empirical Economics, Springer, vol. 49(1), pages 1-31, August.
    32. Konstantinos Tatsiramos, 2009. "Unemployment Insurance in Europe: Unemployment Duration and Subsequent Employment Stability," Journal of the European Economic Association, MIT Press, vol. 7(6), pages 1225-1260, December.
    33. Peter Dolton & Donal O'Neill, 2002. "The Long-Run Effects of Unemployment Monitoring and Work-Search Programs: Experimental Evidence from the United Kingdom," Journal of Labor Economics, University of Chicago Press, vol. 20(2), pages 381-403, Part.
    34. Cees Gorter & Guyonne R. J. Kalb, 1996. "Estimating the Effect of Counseling and Monitoring the Unemployed Using a Job Search Model," Journal of Human Resources, University of Wisconsin Press, vol. 31(3), pages 590-610.
    35. Huber Martin & Wunsch Conny & Lechner Michael & Walter Thomas, 2011. "Do German Welfare-to-Work Programmes Reduce Welfare Dependency and Increase Employment?," German Economic Review, De Gruyter, vol. 12(2), pages 182-204, May.
    36. Werner Eichhorst & Otto Kaufmann & Regina Konle-Seidl (ed.), 2008. "Bringing the Jobless into Work?," Springer Books, Springer, number 978-3-540-77435-8, December.
    37. Bernhard Boockmann & Stephan L. Thomsen & Thomas Walter, 2014. "Intensifying the use of benefit sanctions: an effective tool to increase employment?," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-19, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tobias Brändle & Lukas Fervers, 2017. "Give it Another Try: What are the Effects of a Public Employment Scheme Especially Designed for Hard-to-Place Workers?," IAW Discussion Papers 129, Institut für Angewandte Wirtschaftsforschung (IAW).
    2. Tobias Brändle & Lukas Fervers, 2021. "Give it Another Try: What are the Effects of a Job Creation Scheme Especially Designed for Hard-to-Place Workers?," Journal of Labor Research, Springer, vol. 42(3), pages 382-417, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Muller, Paul & van der Klaauw, Bas & Heyma, Arjan, 2017. "Comparing Econometric Methods to Empirically Evaluate Job-Search Assistance," IZA Discussion Papers 10531, Institute of Labor Economics (IZA).
    2. Lachowska, Marta & Meral, Merve & Woodbury, Stephen A., 2016. "Effects of the unemployment insurance work test on long-term employment outcomes," Labour Economics, Elsevier, vol. 41(C), pages 246-265.
    3. Tito Boeri & Jan van Ours, 2013. "The Economics of Imperfect Labor Markets: Second Edition," Economics Books, Princeton University Press, edition 1, number 10142.
    4. Arni, Patrick & Schiprowski, Amelie, 2019. "Job search requirements, effort provision and labor market outcomes," Journal of Public Economics, Elsevier, vol. 169(C), pages 65-88.
    5. Tobias Brändle & Lukas Fervers, 2021. "Give it Another Try: What are the Effects of a Job Creation Scheme Especially Designed for Hard-to-Place Workers?," Journal of Labor Research, Springer, vol. 42(3), pages 382-417, December.
    6. Arni, Patrick & Schiprowski, Amelie, 2016. "Strengthening Enforcement in Unemployment Insurance: A Natural Experiment," IZA Discussion Papers 10353, Institute of Labor Economics (IZA).
    7. Rainer Eppel & Helmut Mahringer, 2019. "Getting a lot out of a little bit of work? The effects of marginal employment during unemployment," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(2), pages 381-408, May.
    8. Paul Muller & Bas van der Klaauw & Arjan Heyma, 2020. "Comparing econometric methods to empirically evaluate activation programs for job seekers," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 35(5), pages 526-547, August.
    9. Bart Cockx & Muriel Dejemeppe & Andrey Launov & Bruno Van der Linden, 2018. "Imperfect Monitoring of Job Search: Structural Estimation and Policy Design," Journal of Labor Economics, University of Chicago Press, vol. 36(1), pages 75-120.
    10. van der Klaauw, Bas & Ziegler, Lennart, 2019. "A Field Experiment on Labor Market Speeddates for Unemployed Workers," IZA Discussion Papers 12140, Institute of Labor Economics (IZA).
    11. Duncan McVicar, 2020. "The impact of monitoring and sanctioning on unemployment exit and job-finding rates," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-49, June.
    12. Sebastien Menard & Solenne Tanguy, 2017. "Revisiting Hopenhayn and Nicolini 's optimal unemployment insurance with job search monitoring and sanctions," TEPP Working Paper 2017-08, TEPP.
    13. Arni, Patrick & Schiprowski, Amelie, 2015. "The Effects of Binding and Non-Binding Job Search Requirements," IZA Discussion Papers 8951, Institute of Labor Economics (IZA).
    14. Jonas Maibom & Michael Rosholm & Michael Svarer, 2017. "Experimental Evidence on the Effects of Early Meetings and Activation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 119(3), pages 541-570, July.
    15. Mergele, Lukas & Weber, Michael, 2020. "Public employment services under decentralization: Evidence from a natural experiment," Journal of Public Economics, Elsevier, vol. 182(C).
    16. Andrew Wright & Brian Dollery & Michael Kortt & Shawn Leu, 2020. "Examining the Effects of Zero‐Dollar Unemployment Payment Sanctions," The Economic Record, The Economic Society of Australia, vol. 96(315), pages 490-505, December.
    17. Schmidl, Ricarda, 2015. "The Effectiveness of Early Vacancy Information in the Presence of Monitoring and ALMP," IZA Discussion Papers 9575, Institute of Labor Economics (IZA).
    18. Laporšek Suzana & Vodopivec Milan & Vodopivec Matija, 2022. "Activation programs for unemployment benefit recipients in Slovenia," Review of Economic Perspectives, Sciendo, vol. 22(1), pages 75-95, June.
    19. Lombardi, Stefano, 2019. "Threat effects of monitoring and unemployment insurance sanctions: evidence from two reforms," Working Paper Series 2019:22, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    20. Michèle Belot & Philipp Kircher & Paul Muller, 2019. "Providing Advice to Jobseekers at Low Cost: An Experimental Study on Online Advice," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(4), pages 1411-1447.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iaw:iawdip:125. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Rolf Kleimann (email available below). General contact details of provider: https://edirc.repec.org/data/iawtude.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.