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The Threat Effect of Active Labour Market Programmes

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  • Michael Rosholm
  • Michael Svarer

Abstract

In this paper, we estimate the threat effect of active labour market programmes (ALMPs) for a sample of unemployed men in Denmark. Threat effects of such programmes capture the impacts of a system of ALMPs prior to actual participation. Rational economic agents make search decisions based on the expected discounted value of unemployment, and the perceived risk of future participation in programmes may affect job-search behaviour early in the unemployment spell. We find a strong and significant threat effect, which is shown to reduce average unemployment duration by two and a half weeks. Copyright © The editors of the "Scandinavian Journal of Economics" 2008 .

Suggested Citation

  • Michael Rosholm & Michael Svarer, 2008. "The Threat Effect of Active Labour Market Programmes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(2), pages 385-401, June.
  • Handle: RePEc:bla:scandj:v:110:y:2008:i:2:p:385-401
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