The Effects of Benefits, Incentives, and Sanctions on Youth Employment
The youth unemployment rate in Denmark has recently been declining dramatically, which is unique among the OECD countries. In 1996, a radical labour market reform was implemented, the Youth Unemployment Programme (YUP), directed towards unemployed, low-educated youth. This paper analyses the effects of the implementation of the YUP. We investigate the effects on the duration of unemployment spells and on the transition rates from unemployment to schooling and employment. We find that the YUP has been successful through a combination of three effects: an announcement effect, a direct programme effect, and a sanction effect.
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