DP3489 The Locking-in Effect of Subsidized Jobs

Author(s): Jan C. van Ours
Publication Date: August 2002
Keyword(s): active labour market policy, duration models, subsidized jobs, unemployment
JEL(s): C41, J68
Programme Areas: Labour Economics, Transition Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=3489

Recent evaluations of active labour market policies are not very optimistic about their effectiveness to bring unemployed back to work. An important reason is that unemployed get locked-in, that is they reduce their effort to find a regular job. This Paper uses an administrative data set from the Slovak Republic on durations of individual unemployment spells. The focus of the analysis is temporary subsidized jobs. By exploiting the variation in the duration of these jobs it is possible to investigate whether or not the locking-in effect is important. It turns out that it is.