Does subsidised temporary employment get the unemployed back to work? An econometric analysis of two different schemes
BibTeX
@article{gerfin2005does,
title={Does subsidised temporary employment get the unemployed back to work? An econometric analysis of two different schemes},
author={Gerfin, Michael and Lechner, Michael and Steiger, Heidi},
journal={Labour economics},
volume={12},
number={6},
pages={807--835},
year={2005},
publisher={Elsevier}
}
Abstract
Subsidised employment is an important tool of active labour market policies to improve the reemployment chances of the unemployed. Using unusually informative individual data from administrative records, we investigate the effects of two different schemes of subsidised temporary employment implemented in Switzerland: non-profit employment programmes (EP) and a subsidy for temporary jobs (TEMP) in private and public firms. Econometric matching methods show that TEMP is more successful than EP in getting the unemployed back to work. Compared to not participating in any programme, EP and TEMP are ineffective for unemployed who find jobs easily anyway or have a short unemployment spell. For potential and actual long-term unemployed, both programmes may have positive effects, but the effect of TEMP is larger.
Notes and Excerpts
Related to, but not quite the same as Partial Unemployment Insurance
The wording of the law regulating TEMP is not very specific. Rehiring laid-off workers in TEMP jobs by the same firm is usually not possible. However, using TEMP as a subsidised screening device for firms is not ruled out and obviously sometimes endorsed by the placement offices in order to improve job matches. However, TEMP jobs are not explicitly expected to become permanent after the subsidy runs out.
Why TEMP jobs help? Speculation:
- soft human capital (contacts and references)
- signaling productivity or attachment to the labor force
- TEMP as a subsidised screening device
While searching for possible explanations for our findings, the fairly systematic heterogeneity of effects between different groups of unemployed indicates evidence for positive signalling effects of TEMP (based on the results for the short-term unemployed). Furthermore, there is also evidence for positive human capital effects for both EP and TEMP (based on the results for low-skill unemployed).