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Threat Effect Of The Labour Market Programs In Denmark: Evidence From A Quasi-Experiment

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  • Ott Toomet

Abstract

This paper analyses the pre-participation effect of the Danish active labour market programs on the welfare recipients. The Danish participation rules differ for “young” and “old” individuals. A reform which increased the age boundary between “young” and “old”is used to identify the effect of the “threat” of active labour market program participation before the actual participation starts. We use a register-based dataset and focus on the transition intensity out of welfare. We show that the reform led to a 25% increase in early exit rate for men, which corresponds to effect of halving the benefits. There is no indication that the reform led to exits elsewhere than employment or to lower-quality jobs. The impact on women is smaller, statistically not significant, and partially related to movements to education. There is some evidence that the effect is related to the arrival of specific information (anticipation effect) and it is limited to a number of compliers only.

Suggested Citation

  • Ott Toomet, 2008. "Threat Effect Of The Labour Market Programs In Denmark: Evidence From A Quasi-Experiment," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 62, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    • Handle: RePEc:mtk:febawb:62
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    References listed on IDEAS

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    Cited by:

    1. Hohmeyer, Katrin & Wolff, Joachim, 2016. "Of carrots and sticks: The effect of workfare announcements on the job search behaviour and reservation wage of welfare recipients," VfS Annual Conference 2016 (Augsburg): Demographic Change 145523, Verein für Socialpolitik / German Economic Association.

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    More about this item

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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