DP3669 Does Subsidized Temporary Employment Get the Unemployed Back to Work? An Econometric Analysis of Two Different Schemes

Author(s): Michael Gerfin, Michael Lechner, Heidi Stieger
Publication Date: December 2002
Keyword(s): active labour market policies, employment programme, matching on the propensity score, subsidized temporary job, Switzerland, temporary work contracts
JEL(s): J38, J68
Programme Areas: Labour Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=3669

Subsidized employment is an important tool of active labour market policies to improve the chances of the unemployed to find permanent employment. Using informative individual administrative data, we investigate the effects of two different schemes of subsidized temporary employment implemented in Switzerland. One scheme operates as a non-profit employment programme (EP), whereas the other one is a subsidy for temporary jobs (TEMP) in firms operating in competitive markets. Using econometric matching methods, we find that TEMP is considerably more successful in getting the unemployed back into work than EP. We also find that, compared to non-participation, both programmes are ineffective for unemployed who find jobs easily anyway, as well as for those with short unemployment duration. For unemployed with potentially long unemployment duration and for actual long term unemployed, both programmes may have positive effects, but the effect of TEMP is much larger.