The Threat Effect of Active Labor Market Programs: A Systematic Review

Abstract

Abstract. This paper is a systematic review of the threat effect of active labor market programs for unemployed individuals. The threat effect is the induced change in the hazard rate of leaving unemployment prior to program participation. Studies included in the review all estimated a threat effect, with the participants in all cases being unemployed individuals in receipt of benefit of some kind during their tenure of unemployment. Eight of these studies have been included in a metaanalysis: The meta-analysis, which has been carried out using a random effects model to account for heterogeneity, indicated a hazard ratio of 1.25 for the pooled estimate. We conclude that active labor market programs constitute a statistically significant threat effect, although it is modest.

Participation in labour market programmes: A positive or negative signal of employability?

“…Participation in TEPs might be especially valued in the low-skilled labour market segment when employers assume voluntary participation, as this signals a willingness to engage in unrewarding and repetitive activities that are typical of these occupations. Often, however, caseworkers use TEPs as a sanctioning device when clients do not comply with job search requirements (PES Interview 2; Auer and Fossati, 2019; Duell et al, 2010; Filges and Hansen, 2017). 4 Consequently, employers who believe that TEPs are assigned to sanction recalcitrant jobseekers use participation to identify potentially unproductive candidates.…”

Unemployment Benefits and Labour Market in OECD and Russia

“…Some papers studied empirically the relevance of collective bargaining for the "hold-up" problem and investment, with inconclusive results overall. Card, Devicienti and Maida (2014 [54]), using matched employer-employee data from Italy's Veneto region, obtain little evidence of hold-up. Based on sector-level data for OECD countries, Cardullo, Conti and Sulis (2015 [55]) find that union coverage reduces investment in sunk-capital-intensive industries relative to others.…”

“…As is illustrated by the Swiss pilot programme evaluated by (Arni, 2012[15]), the inability of case workers to forecast which older displaced workers in particular faced the greatest re-employment barriers did not prevent the programme from speeding re-employment and raising employment stability. 54 Another group that could be offered greater access to intensive services at the beginning of their unemployment spell is displaced workers whose participation in early intervention measures, such as counselling and skills audits, reveals that they face important re-employment barriers. There…”

“…At a result, relatively few displaced workers receive income benefits and, when they do receive benefits, they are often assigned to the lowest level of re-employment support, at least initially. 54 The Back to Work reviews also identified a number of interesting initiatives targeting more intensive re-employment and retraining services to older long-tenure displaced workers, including the Second Career programme in Ontario (OECD, 2015 [13]). 55 Since unemployment benefits in Australia and New Zealand (the New Start Allowance in Australia and Jobseeker Support in New Zealand) is systematically means tested against all forms of income, many displaced workers have no access to these benefits (e.g.…”

Do Reemployment Programs for the Unemployed Work for Youth? Evidence From the Great Recession in the United States

“…The WIA Gold Standard Experiment did not include the youth component of the program(Fortson et al, 2018).8 Barnow and Smith (2016) offer a broad overview of U.S. employment and training programs and their evaluations.9 Decker et al (2000) also showed that program effects on UI duration for participants under the age of 35 were similar to or greater than the effects for participants 35 years old or older. 10 Such threat effects also appear for European programs that serve adults (e.g.,Filges and Hansen, 2017).…”