Waiting longer before claiming, and activating youth: no point?

Abstract

Purpose The purpose of this paper is to estimate the impact of two policies (an extension of the waiting period before entitlement to unemployment insurance (UI) and an intensification of counselling) targeted at unemployed school-leavers in Belgium on unemployment duration and on the quality of work. Design/methodology/approach The length of both policies is sharply determined by two distinct age thresholds. These thresholds are exploited to estimate the impact within a regression discontinuity design using a large administrative data set of all recent labour market entrants. Findings The longer waiting period does not significantly impact job finding while the Youth Work Plan does increase the job-finding rate eight months after the onset of the programme. The accepted wage is unaffected, but both policies lower the number of working days resulting in lower earnings. This effect is especially prevalent for youth from low-income households. Research limitations/implications For both policies, participation was delineated by an age cut-off which was only four months apart. This sizeably reduced the width of the age window to detect a corresponding discontinuity in behaviour and hereby also the statistical power of the estimator. Additionally, due to confounding policies the estimated effects are local treatment effects for highly educated youth around the age cut-offs. Social implications The findings suggest that threatening with a sanction is not the right instrument to activate highly educated unemployed school-leavers. While supportive measures appear to be more effective, this may be partly a consequence of acceptance of lower quality jobs due to liquidity constraints and of caseworkers giving misleading advice that temporary jobs are stepping stones to long-term employment. Originality/value To the best of the authors’ knowledge, this is the first paper to estimate the impact of changing the waiting period in UI. The paper adds to the existing literature on the effects of counselling and UI design on employment and job quality.

Switching from an inclining to a zero-level unemployment benefit profile: Good for work incentives?

“…Autor and Houseman (2010) and, more recently, van der Klaauw and Ziegler (2019) also find that temp jobs do not serve as stepping stones towards regular employment or better paying jobs. Our findings are also consistent with those of Cockx and Van Belle (2019) who found that extending the waiting period of the activation allowance from 9 to 12 months for graduates of a master's degree did not significantly affect the discrete time transition to employment measured in a very similar way as in this study, while it appears to have reduced the number of working days and earnings.…”

“…In 2015, young entrants to the labor market who live on their own without dependents were entitled to a monthly benefit of 818 euro above the age of 21. In Belgium, most unemployed youths still live with their parents (Cockx and Van Belle, 2019). In that case they were paid out a monthly allowance of 425 euro as cohabitant.…”

“…This is not the first study of the behavioral effects of waiting periods for UI or welfare benefits. However, the existing papers have focused on the effect of introducing such qualifying periods (Bolhaar et al, 2019) or extending their duration (Cockx and Van Belle, 2019). Other research has studied instead the effect on work incentives of receiving benefit payments after a period of no-pay status (Bargain and Doorley, 2011;von Buxhoeveden, 2019).…”

Does on-the-job training help graduates find a job? Evidence from an Italian region

“…Chéron, Rouland and Wolff (2010) estimate the impact of firm-provided training on labour market mobility in France, showing that participation in a training program reduces the probability of switching jobs or becoming unemployed in the two subsequent years. Cockx and Van Belle (2018) arrive at similar conclusions, finding small positive effects for training and counselling measures devoted to recent graduates in Belgium. Hidalgo et al (2014) show that in the Netherlands training vouchers on low-skilled workers do not have any significant impact on monthly wages or on job mobility, but have a significant impact on future training plans.…”

Better together: Active and passive labor market policies in developed and developing economies

“…Overall, results suggest that -after an initial lock-in periodboth the job-finding rate and the quality of the employment increase due to the policy mix (Bolhaar et al, 2019;Crépon et al, 2012;Graversen and Van Ours, 2008;Markussen and Røed, 2016;Pastore et al, 2021). Nevertheless, some studies find no or adverse effects on labor market outcomes (Cockx and Van Belle, 2019;McGuiness et al, 2019). For emerging and developing economies, this sounds weird to me.…”