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Are active labor market policies (cost-)effective in the long run? Evidence from the Netherlands

Author

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  • Marloes Lammers

    (SEO Amsterdam Economics and Netspar)

  • Lucy Kok

    (SEO Amsterdam Economics)

Abstract

The long-run effects of active labor market policies can be quite different from their short-run effects. Negative short-run effects can be explained by the lock-in effect: During training, the job search efforts of unemployed individuals decrease or even seize, thereby causing an initial drop in the probability of employment for those attending training programs. We show that in the long run (4–7 years after the start of a program) all programs have a positive and long-lasting impact on the probability of employment. However, the cost-effectiveness over the period of 4–7 years depends crucially on the magnitude of the initial lock-in effect. For programs which increase the job search efforts of participants during the program, like placement services, no lock-in effect is observed. In the long run, only placement services and training courses are cost-effective.

Suggested Citation

  • Marloes Lammers & Lucy Kok, 2021. "Are active labor market policies (cost-)effective in the long run? Evidence from the Netherlands," Empirical Economics, Springer, vol. 60(4), pages 1719-1746, April.
    • Handle: RePEc:spr:empeco:v:60:y:2021:i:4:d:10.1007_s00181-019-01812-3
    DOI: 10.1007/s00181-019-01812-3
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    References listed on IDEAS

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    Cited by:

    1. Pablo Blanchard & Matías Brum & Paula Carrasco & Cecilia Parada & Ivone Perazzo, 2023. "Employment effects of a social and labor inclusion program," Documentos de Trabajo (working papers) 23-02, Instituto de Economía - IECON.
    2. Theodoropoulos, Nikolaos & Voucharas, Georgios, 2023. "Firm Closures and Labor Market Policies in Europe: Evidence from Retrospective Longitudinal Data," GLO Discussion Paper Series 1288, Global Labor Organization (GLO).
    3. Andrew Wright & Brian Dollery & Michael Kortt & Shawn Leu, 2022. "The Impact of More Intensive Unemployment Benefit Requirements on Jobseekers’ Likelihood of Complying," The Economic Record, The Economic Society of Australia, vol. 98(320), pages 63-79, March.

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    More about this item

    Keywords

    ALMPs; Unemployment; Welfare recipients; Matching;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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