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

50 Pages Posted: 22 Jan 2003

See all articles by Michael Gerfin

Michael Gerfin

University of Bern; IZA Institute of Labor Economics

Michael Lechner

University of St. Gallen - Swiss Institute for Empirical Economic Research

Heidi Steiger

UBS AG; University of St. Gallen - Swiss Institute for International Economics and Applied Economic Research

Date Written: December 2002

Abstract

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.

Keywords: Subsidized temporary job, employment programme, temporary work contracts, active labour market policies, matching on the propensity score, Switzerland

JEL Classification: J38, J68

Suggested Citation

Gerfin, Michael and Lechner, Michael and Steiger, Heidi, Does Subsidized Temporary Employment Get the Unemployed Back to Work? An Econometric Analysis of Two Different Schemes (December 2002). Available at SSRN: https://ssrn.com/abstract=372700

Michael Gerfin

University of Bern ( email )

CH-3012 Bern
Switzerland
+41 31 631 4092 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Michael Lechner (Contact Author)

University of St. Gallen - Swiss Institute for Empirical Economic Research ( email )

Varnbuelstrasse 14
St. Gallen, 9000
Switzerland
+41 71 224 2320 (Phone)

Heidi Steiger

UBS AG ( email )

Bahnhofstrasse 45
Zurich, 8001
Switzerland

University of St. Gallen - Swiss Institute for International Economics and Applied Economic Research ( email )

Dufourstr. 48
St. Gallen, 9000
Switzerland

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