The Locking-In Effect of Subsidized Jobs
39 Pages Posted: 18 Sep 2002
Date Written: August 2002
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.
Keywords: Unemployment, active labour market policy, subsidized jobs, duration models
JEL Classification: C41, J68
Suggested Citation: Suggested Citation