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Threat Effect Of The Labour Market Programs In Denmark: Evidence From A Quasi-Experiment

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Author Info
Ott Toomet
Abstract

This paper analyses the pre-participation effect of the Danish active labour market programs on the welfare recipients. The Danish participation rules differ for “young” and “old” individuals. A reform which increased the age boundary between “young” and “old”is used to identify the effect of the “threat” of active labour market program participation before the actual participation starts. We use a register-based dataset and focus on the transition intensity out of welfare. We show that the reform led to a 25% increase in early exit rate for men, which corresponds to effect of halving the benefits. There is no indication that the reform led to exits elsewhere than employment or to lower-quality jobs. The impact on women is smaller, statistically not significant, and partially related to movements to education. There is some evidence that the effect is related to the arrival of specific information (anticipation effect) and it is limited to a number of compliers only.

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Paper provided by Faculty of Economics and Business Administration, University of Tartu (Estonia) in its series University of Tartu - Faculty of Economics and Business Administration Working Paper Series with number 62.

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Length: 48 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:mtk:febawb:62

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Find related papers by JEL classification:
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy

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  1. Michael Svarer, 2007. "The Effect of Sanctions on the Job Finding Rate: Evidence from Denmark," Economics Working Papers 2007-10, School of Economics and Management, University of Aarhus. [Downloadable!]
    Other versions:
  2. Bruno, CREPON & Muriel, DEJEMEPPE & Marc, GURGAND, 2005. "Counseling the unemployed : does it lower unemployment duration and recurrence ?," Discussion Papers (ECON - Département des Sciences Economiques) 2005034, Université catholique de Louvain, Département des Sciences Economiques. [Downloadable!]
    Other versions:
  3. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, vol. 58(4), pages 757-82, July. [Downloadable!] (restricted)
    Other versions:
  4. Bruce D. Meyer, 1995. "Lessons from the U.S. Unemployment Insurance Experiments," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 91-131, March. [Downloadable!] (restricted)
  5. David Card & Raj Chetty & Andrea Weber, 2007. "The Spike at Benefit Exhaustion: Leaving the Unemployment System or Starting a New Job?," American Economic Review, American Economic Association, vol. 97(2), pages 113-118, May. [Downloadable!]
    Other versions:
  6. 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. [Downloadable!]
  7. Richardson, Linda L, 2002. "Impact of the Mutual Obligation Initiative on the Exit Behaviour of Unemployment Benefit Recipients: The Threat of Additional Activities," The Economic Record, The Economic Society of Australia, vol. 78(243), pages 406-21, December. [Downloadable!] (restricted)
  8. Daniel H. Klepinger & Terry R. Johnson & Jutta M. Joesch, 2002. "Effects of unemployment insurance work-search requirements: The Maryland experiment," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 56(1), pages 3-22, October.
  9. Ham, John C & Rea, Samuel A, Jr, 1987. "Unemployment Insurance and Male Unemployment Duration in Canada," Journal of Labor Economics, University of Chicago Press, vol. 5(3), pages 325-53, July. [Downloadable!] (restricted)
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  10. Ott-Siim Toomet, 2005. "Does an Increase in Unemployment Income Lead to Longer Unemployment Spells? Evidence Using Danish Unemployment Assistance Data," Bank of Estonia Working Papers 2005-09, Bank of Estonia, revised 10 Oct 2005. [Downloadable!]
  11. Torben M. Andersen & Michael Svarer, 2007. "Flexicurity – labour market performance in Denmark," Economics Working Papers 2007-09, School of Economics and Management, University of Aarhus. [Downloadable!]
    Other versions:
  12. Michael Rosholm & Michael Svarer, 2004. "Estimating the Threat Effect of Active Labour Market Programmes," Economics Working Papers 2004-6, School of Economics and Management, University of Aarhus. [Downloadable!]
    Other versions:
  13. Ott Toomet, 2005. "Does an increase in unemployment income lead to longer unemployment spells? Evidence using Danish unemployment assistance data," Economics Working Papers 2005-7, School of Economics and Management, University of Aarhus. [Downloadable!]
  14. Dolton, Peter & O'Neill, Donal, 1996. "Unemployment Duration and the Restart Effect: Some Experimental Evidence," Economic Journal, Royal Economic Society, vol. 106(435), pages 387-400, March. [Downloadable!] (restricted)
  15. 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. [Downloadable!] (restricted)
    Other versions:
  16. Dan A. Black & Jeffrey A. Smith & Mark C. Berger & Brett J. Noel, 2003. "Is the Threat of Reemployment Services More Effective Than the Services Themselves? Evidence from Random Assignment in the UI System," American Economic Review, American Economic Association, vol. 93(4), pages 1313-1327, September. [Downloadable!]
  17. Lars Pico Geerdsen, 2006. "Is there a Threat Effect of Labour Market Programmes? A Study of ALMP in the Danish UI System," Economic Journal, Royal Economic Society, vol. 116(513), pages 738-750, 07. [Downloadable!] (restricted)
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