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Side Effects of Labor Market Policies

Author

Listed:
  • Marco Caliendo

    (University of Potsdam, IZA Bonn, DIW Berlin, IAB Nuremberg)

  • Robert Mahlstedt

    (University of Copenhagen, IZA Bonn)

  • Gerard J. van den Berg

    (University of Bristol, University of Groningen, IFAU Uppsala, IZA Bonn, ZEW, CEPR, CESifo, UCLS)

  • Johan Vikström

    (IFAU Uppsala, Uppsala University, UCLS)

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

  • Marco Caliendo & Robert Mahlstedt & Gerard J. van den Berg & Johan Vikström, 2020. "Side Effects of Labor Market Policies," CEPA Discussion Papers 22, Center for Economic Policy Analysis.
    • Handle: RePEc:pot:cepadp:22
    DOI: 10.25932/publishup-47883
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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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