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Does Subsidised Temporary Employment Get the Unemployed Back to Work? An Econometric Analysis of Two Different Schemes

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Author Info

  • Gerfin, Michael

    ()
    (University of Bern)

  • Lechner, Michael

    ()
    (University of St. Gallen)

  • Steiger, Heidi

    ()
    (University of St. Gallen)

Abstract

Subsidised employment is an important tool of active labour market policies to improve the chances of the unemployed to find permanent employment. Using informative individual administrative data we investigate the effects of two different schemes of subsidised temporary employment implemented in Switzerland. One scheme operates as a non-profit employment programme (EP), whereas the other one is a subsidy for temporary jobs (TEMP) in firms operating in competitive markets. Using econometric matching methods we find that TEMP is considerably more successful in getting the unemployed back into work than EP. We also find that compared to nonparticipation both programmes are ineffective for unemployed who find job easily anyway as well as for those with short unemployment duration. For unemployed with potentially long unemployment duration and for actual long term unemployed, both programmes may have positive effects, but the effect of TEMP is much larger.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 606.

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Length: 50 pages
Date of creation: Oct 2002
Date of revision:
Publication status: published in: Labour Economics, 2005, 12 (6), 807-835
Handle: RePEc:iza:izadps:dp606

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Keywords: Switzerland; matching on the propensity score; subsidised temporary job; employment programme; temporary work contracts; active labour market policies;

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  1. Albert Ma, Ching-to & Weiss, Andrew M., 1993. "A signaling theory of unemployment," European Economic Review, Elsevier, vol. 37(1), pages 135-157, January.
  2. Geweke, John & Keane, Michael P & Runkle, David, 1994. "Alternative Computational Approaches to Inference in the Multinomial Probit Model," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 609-32, November.
  3. Michael Lechner, 2005. "Some practical issues in the evaluation of heterogeneous labour market programmes by matching methods," Labor and Demography, EconWPA 0505006, EconWPA.
  4. Lawrence F. Katz, 1996. "Wage Subsidies for the Disadvantaged," NBER Working Papers 5679, National Bureau of Economic Research, Inc.
  5. Gary Burtless, 1985. "Are targeted wage subsidies harmful? Evidence from a wage voucher experiment," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 39(1), pages 105-114, October.
  6. Rafael Lalive & Jan C. van Ours & Josef Zweimueller, . "The Impact of Active Labor Market Programs on the Duration of Unemployment," IEW - Working Papers 041, Institute for Empirical Research in Economics - University of Zurich.
  7. Borsch-Supan, Axel & Hajivassiliou, Vassilis A., 1993. "Smooth unbiased multivariate probability simulators for maximum likelihood estimation of limited dependent variable models," Journal of Econometrics, Elsevier, vol. 58(3), pages 347-368, August.
  8. Gerfin, Michael & Lechner, Michael, 2000. "Microeconometric Evaluation of the Active Labour Market Policy in Switzerland," IZA Discussion Papers 154, Institute for the Study of Labor (IZA).
  9. Lechner, Michael, 1999. "Identification and Estimation of Causal Effects of Multiple Treatments Under the Conditional Independence Assumption," IZA Discussion Papers 91, Institute for the Study of Labor (IZA).
  10. Brian Bell & Richard Blundell & John Van Reenen, 1999. "Getting the unemployed back to work: the role of targeted wage subsidies," IFS Working Papers, Institute for Fiscal Studies W99/12, Institute for Fiscal Studies.
  11. Michael Lechner, 2002. "Program Heterogeneity And Propensity Score Matching: An Application To The Evaluation Of Active Labor Market Policies," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 205-220, May.
  12. Carling, Kenneth & Richardson, Katarina, 2001. "The relative efficiency of labor market programs: Swedish experience from the 1990's," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2001:2, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  13. Woodbury, Stephen A & Spiegelman, Robert G, 1987. "Bonuses to Workers and Employers to Reduce Unemployment: Randomized Trials in Illinois," American Economic Review, American Economic Association, vol. 77(4), pages 513-30, September.
  14. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 65(2), pages 261-94, April.
  15. Michael Lechner, 2000. "Programme Heterogeneity and Propensity Score Matching: An Application to the Evaluation of Active Labour Market Policies," Econometric Society World Congress 2000 Contributed Papers 0647, Econometric Society.
  16. Carling, Kenneth & Richardson, Katarina, 2004. "The relative efficiency of labor market programs: Swedish experience from the 1990s," Labour Economics, Elsevier, vol. 11(3), pages 335-354, June.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Ed Balls and Workfare.
    by Ralph Musgrave in Ralphonomics on 2013-01-07 08:18:00
  2. JG and subsidised temporary employment.
    by Ralph Musgrave in Ralphonomics on 2014-01-29 09:33:00
  3. Mitchell and Wray’s flawed ideas on the Job Guarantee.
    by Ralph Musgrave in Ralphonomics on 2014-02-19 11:50:00
  4. Where is the logical niche for "make work"? Part III.
    by Ralph in Ralphonomics on 2010-01-27 13:09:00
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