Active Labour Market Policy and Unemployment Scarring: A Ten-year Swedish Panel Study

Abstract

Previous studies have shown mixed results concerning the effects of participation in active labour market policy programmes (ALMPs) on the longer-term scars in the form of poor income development and low job stability following the end of an unemployment spell. Most previous studies, however, have been limited both in the time frame used and to particular programmes. We argue that human capital investments are long-term investments and should therefore also be investigated from a long-term perspective. ALMP training and ALMPs as subsidised employment also represent different types of human capital investments that may produce effects that are differently distributed over time. In order to handle these issues, this article uses a longitudinal register-based dataset in which all long-term (more than six months) unemployed Swedes in 1993, who had no labour market problems in 1992, were followed for ten years. We found positive effects of ALMP participation concerning both the probability of reaching pre-unemployment incomes and a reduction in the hazard of exiting the labour market, while the effect on the probability of having an unemployment-free year was mixed. The effects of the two forms of ALMPs were differently distributed over time, with ALMP employment having an immediate effect that decreased relatively quickly and ALMP training having a longer-term effect.

Youth unemployment and functional somatic symptoms in adulthood: results from the Northern Swedish cohort

“…Instead, this supports the idea of adolescence as a sensitive period, 16 though more research is needed. Of course, a social chain of risk could be mediated through other socioeconomic consequences of youth unemployment, such as financial strain and temporary positions in the labour market, 6,7,28 something which should be explored in future research. Another possible mediator is health behaviour: previous research has shown that unemployed youths, particularly young men, have higher tendency to change their health behaviour, such as increased alcohol consumption and smoking.…”

“…Sociological and economic studies have shown that unemployment may lead to socioeconomic consequences, such as long-term job insecurity, lower wages and downward occupational mobility, remaining after re-employment. [6][7][8] There are also public health studies indicating that unemployment may lead to long-term mental health consequences and lowering of the long-term baseline of well-being. 9 A Swedish study on unemployment and ill-health in different age groups shows that unemployment spells during youth have stronger health implications than unemployment spells during early adulthood, particularly for poor psychological health and smoking, 10 indicating the need to further explore the relationship between youth unemployment and ill-health with longer follow-up times.…”

Scars that will not Disappear: Long-term Associations between Early and Later life Unemployment under Different Welfare Regimes

“…The effect of unemployment insurance (UI), for example, 'goes significantly beyond preserving economic status through earnings-related benefits during unemployment spells, but rather presumes that the welfare state has a positive effect on workers' capacity to recover from unemployment -and thus on preventing career scars and negatively cumulating career dynamics in the longer run' (Gangl, 2004(Gangl, : 1323; italics in the original; also see Belzil, 2001). Further institutional features of labour markets which might affect scar effects are amongst others a country's employment protection legislation (EPL) (e.g., Gangl, 2006) or active labour market policy (ALMP), (e.g., Strandh and Nordlund, 2008) programmes.…”

Investment in Second-Chance Education for adults and income development in Sweden

“…Most studies focus on the evaluation of effects of active labour market programmes which in fact showed rather negative immediate effects in the 1990s (OECD, 1996;AMS, 1997;Larson, 2000), while the long term effects from the same time period point toward more positive effects on job chances and wage increases (Strandh and Nordlund, 2008). However, Anders Stenberg has paid a lot of attention to the effects of FE among Swedish participants in a broader perspective rather than to limit the evaluations toward effects of "pure" active labour market policy programmes.…”