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Employment Effects and Fiscal Spillovers of a Public Sector Employment Program

Author

Listed:
  • Mörk, Eva

    (Department of Economics, Uppsala University; CESifo; IEB; IZA; UCFS, UCLS; Urban Lab)

  • Ottosson, Lillit

    (Swedish Institute for Social Research, Stockholm, University; UCLS; UIL; Institute for Evaluation of Labour Market and Education Policy (IFAU))

  • Vikman, Ulrika

    (Institute for Evaluation of Labour Market and Education Policy (IFAU); UCLS; UCFS)

Abstract

We evaluate a temporary public sector employment program targeted at individuals with a weak labor market attachment. To account for dynamic selection into the program, we apply the dynamic inverse probability weighting approach. We show that the program is successful in terms of increasing employment and reducing social assistance. The positive employment effects are driven by individuals placed at regular workplaces. For participants with temporary employments at a non-regular workplace, we instead find negative employment effects. The decrease in social assistance is partially countered by an increase in the share receiving unemployment insurance benefits, indicating that municipalities are able to shift costs from the local to the central budget. We further find that cost-effectiveness, as measured by the marginal value of public funds, varies depending on which level of government is considered.

Suggested Citation

  • Mörk, Eva & Ottosson, Lillit & Vikman, Ulrika, 2026. "Employment Effects and Fiscal Spillovers of a Public Sector Employment Program," SOFI Working Papers in Labour Economics 10/2026, Stockholm University, Swedish Institute for Social Research.
    • Handle: RePEc:hhs:sofile:2026_010
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    Keywords

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    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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