How do active policies work for vulnerable youth?

1. How do active policies work for vulnerable youth? by Henrik Lindegaard Andersen Research Fellow, MSc (econ.), PhD Danish Institute of Governmental Research, AKF

2. Introduction • Findings from a review of 25+ impact evaluations • Evaluates the effect of a labour market programme on employment, education enrolment etc. for (disadvantaged) unemployed youth • Conclusion: some evidence that job search assistance (with an element of monitoring) or wage subsidies can accommodate faster re-employment for youth. • Economically the effects are small and long-run effects even smaller. • Other programmes seem to make little difference for the participants, but generally, our knowledge is weak.

3. High knowledge demand • There is no shortage of policy proposals. There is, however, a shortage of empirical evidence on the efficacy of these policies. • Impact and process evaluations: negative or no-effect does not necessarily imply that the programme theory is false. • An experimental design is not the only solution. Quasi-designs or matching methods that rely on administrative data are also popular

4. Results from the review • Focus mainly on 4 types of programmes: • Human capital enhancing programmes such as ordinary or special education programme, and workplace training. Target group is low educated. • Private sector incentive schemes - typically wage subsidies targeted at persons with little experience. • Public sector job creation aimed at the hard to place. • Measures to raise job search efficiency (counselling, short courses, monitoring, sanctions). • But also on the effect of a programme on specific target groups (e.g. low educated, mental illness, social problems).

5. Education and training • We find some evidence of a negative short-term effect due to lock-in, but in the long run the impact becomes more positive (i.e. closer to zero) • Examples include a Swedish programme from the early nineties (Larsson, 2003) and a late nineties Finnish programme (Hämäläinen & Tuomala, 2007)

6. Wage subsidies • There is moderate evidence that wage subsidies have a positive impact on youth employment • Example: New Deal for Young People (UK) • But general equilibrium wage effects and substitution effects on other workers are seldom accounted for

7. Job creation programmes • Both positive and negative effects have been found. The evidence is weak • Example: German 1€ Jobs

8. Job search programmes • There is moderate evidence that job search programmes involving an element of monitoring and sanctions speed up the transition to employment and education, but some studies fail to find long-run impacts • Examples: New Deal for Young People (UK), ‘Ungegodti gang’ (DK) and ‘Ungdomsgarantin’ (SE)

9. Final remarks • Combined measures, e.g. counselling followed by training and a wage subsidy look promising. • Weak evidence concerning vulnerable youth with mental health or social problems. • Our findings seem consistent with existing meta and narrative reviews.