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Side Effects of Labor Market Policies

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  • Caliendo, Marco

    (University of Potsdam)

  • Mahlstedt, Robert

    (University of Copenhagen)

  • van den Berg, Gerard J.

    (University of Groningen)

  • Vikström, Johan

    (IFAU)

Abstract

Labor market policy tools such as training and sanctions are commonly used to help bring workers back to work. By analogy to medical treatments, the individual exposure to these tools may have side effects. We study effects on health using individual-level population registers on labor market events outcomes, drug prescriptions and sickness absence, comparing outcomes before and after exposure to training and sanctions. We find that training improves cardiovascular and mental health and lowers sickness absence. The results suggest that this is not due to improved employment prospects but rather to instantaneous features of participation such as, perhaps, the adoption of a more rigorous daily routine. Unemployment benefits sanctions cause a short-run deterioration of mental health, possibly due higher stress levels, but this tapers out quickly.

Suggested Citation

  • Caliendo, Marco & Mahlstedt, Robert & van den Berg, Gerard J. & Vikström, Johan, 2020. "Side Effects of Labor Market Policies," IZA Discussion Papers 13846, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp13846
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    More about this item

    Keywords

    unemployment; health; sickness; prescriptions; mental health; drugs; training; depression; cardiovascular disease; sanctions;
    All these keywords.

    JEL classification:

    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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