Evaluation of the Effectiveness of Employment Programme on Young Unemployed People

Abstract

Youth unemployment is of paramount concern for the European Union. Young people are facing potentially slow and difficult transitions into stable jobs. What optimally supports young people on the labour market poses a challenging question for economic policy makers. Active labour market policies can be beneficial to young unemployed people. The aim of active labour market policy is to improve employability of the unemployed. The consequences of an overly generous welfare state can be a reduction in motivation to work. The effectiveness of employment programmes is therefore a crucial step in the process. This paper aims to estimate the treatment effect of subsidized employment programmes on young Dutch unemployed people using difference in differences propensity score matching. We test whether the effects of subsidized employment programmes for young Dutch unemployed people are positive and strong in both the short and long term on the probability of re-employment and on the probability of participation in the regular educational system in comparison with the outcome produced in the event that an individual would continue seeking employment as an unemployed person. The probability of re-employment in short-term circumstances is positive, but small. Whereas with long-term examples (two years after the programme start) the probability is negative. Alternatively, the probability of participation in regular educational systems is positive in the short-term as well as in the long-term, but evidently decreases in the long-term. Welfare reforms undertaken in the Netherlands are directed towards enhancing efficiency. The role of social partners in social security administrations is reduced and the reforms are intended to promote reintegration of people who are out of work. There is a general agreement that the Netherlands is going in the right direction by giving priority to work and study over benefits, as it has become evident that generous social benefits make employment policies inefficient.