The impact of active labour market policies on the well-being of the unemployed

an article by Damaris Rose (University of Cologne, Germany) published in Journal of European Social Policy Volume 29 Issue 3 (July 2019)

Abstract

Asking whether social policies can alter the experience of unemployment, this article systematically evaluates whether participation in active labour market policies (ALMPs) influences the well-being of the unemployed. With consistently high unemployment rates in Organisation for Economic Co-operation and Development (OECD) countries, scholars have started to examine the impact of ALMP schemes on a variety of tangible economic outcomes, but place little focus on their sociological and psychological impacts.

Using a novel panel survey, the IZA Evaluation Dataset, I employ a propensity score matching approach combined with difference-in-differences to address selection on both observables and unobservables.

Consistent with my theoretical predictions, I find evidence that ALMP programmes that are most like regular employment, namely wage subsidies and subsidized self-employment, have the strongest impact on the well-being of the unemployed. Looking at regional and gender differences indicates interesting effect heterogeneity.

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