Long-Term Employment and Health Effects of Active Labor Market Programs

TY - JOUR

T1 - Long-Term Employment and Health Effects of Active Labor Market Programs

AU - Bækgaard, Martin

AU - Nielsen, Søren Albeck

AU - Rosholm, Michael

AU - Svarer, Michael

PY - 2024/12/10

Y1 - 2024/12/10

N2 - Active labor market programs (ALMPs) are widely used to speed up return to work among the unemployed. We examine their long-run effects on employment- and health-related outcomes for different target groups, arguing that ALMPs are associated with heterogeneous effects for different target groups and may even detrimentally influence the mental health for the most disadvantaged groups. To this end, we use evidence from randomized controlled trials conducted in Denmark in 2005-2008, in which treatment groups were exposed to intensified active labor market policies in the form of more frequent compulsory meetings with case workers and/or early activation and estimate effects over a period of 10 y. In line with expectations, we find that while ALMPs have the potential to increase labor market participation among resourceful clients even 10 after the original intervention, they have long-run negative effects on the mental health for the most disadvantaged groups among the unemployed. The negative effects are entirely driven by clients who already prior to the trial had mental health issues. These findings suggest that the effects of ALMPs are lasting, but at the same time greatly depend on how they fit with the resources of clients.

AB - Active labor market programs (ALMPs) are widely used to speed up return to work among the unemployed. We examine their long-run effects on employment- and health-related outcomes for different target groups, arguing that ALMPs are associated with heterogeneous effects for different target groups and may even detrimentally influence the mental health for the most disadvantaged groups. To this end, we use evidence from randomized controlled trials conducted in Denmark in 2005-2008, in which treatment groups were exposed to intensified active labor market policies in the form of more frequent compulsory meetings with case workers and/or early activation and estimate effects over a period of 10 y. In line with expectations, we find that while ALMPs have the potential to increase labor market participation among resourceful clients even 10 after the original intervention, they have long-run negative effects on the mental health for the most disadvantaged groups among the unemployed. The negative effects are entirely driven by clients who already prior to the trial had mental health issues. These findings suggest that the effects of ALMPs are lasting, but at the same time greatly depend on how they fit with the resources of clients.

KW - Adult

KW - Denmark

KW - Employment

KW - Female

KW - Humans

KW - Male

KW - Mental Health

KW - Middle Aged

KW - Return to Work/statistics & numerical data

KW - Unemployment/statistics & numerical data

UR - http://www.scopus.com/inward/record.url?scp=85211738795&partnerID=8YFLogxK

U2 - 10.1073/pnas.2411439121

DO - 10.1073/pnas.2411439121

M3 - Journal article

C2 - 39636850

SN - 0027-8424

VL - 121

JO - Proceedings of the National Academy of Sciences (PNAS)

JF - Proceedings of the National Academy of Sciences (PNAS)

IS - 50

M1 - e2411439121

ER -