Does Labour Market Training Motivate Job Search?

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Socialforskningsinstituttet The Danish National Institute of Social Research

Does Labour Market Training Motivate Job Search ?

A Study of Incentive Effects of Compulsory ALMP in the Danish UI System

Lars Pico Geerdsen

Social Integration and Marginalisation Working Paper 23:2002

Working Paper

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Does Labour Market Training Motivate Job Search?

A Study of Incentive Effects of Compulsory ALMP in the Danish UI System

Lars Pico Geerdsen

Social Integration and Marginalisation Working Paper 23:2002

The Working Paper Series of The Danish National Institute of Social Research contain interim results of research and preparatory studies. The Working Paper Series provide a basis for professional discussion as part of the research process.

Readers should note that results and interpretations in the final report or article may differ from the present Working Paper. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including ©-notice, is given to the source.

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(22)

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Escape Rate

Unemployment Duration No UI system

UI system, not eligible

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Escape Rate

Unemployment Duration Benefits running out

No UI system UI system, not eligible UI system, eligible

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714 Lqglylgxdov* h{shfwdwlrqv rq dfwlydwlrq

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56

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57

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58

(29)

Iljxuh := H{shfwhg uhpdlqlqj XL dffruglqj wr wkuhh glhuhqw h{shfwdwlrqv prghov1

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Perfect ForesightSystem foresightNo foresight -8

-4 0 4 8 12 16 20 24

Expected months until activatin period

Months

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Lq wkh dffrxqwlqj htxdwlrq suhvhqwhg deryh L kdyh ghvfulehg hqwlwohphqw +H, dv d frqvwdqw zklfk lv vhw zkhq lqglylgxdov frpphqfh wkhlu XL0vshoo1 Xqghu fhuwdlq frqglwlrqv wkdw pd| qrw eh wkh fdvh1 Lq rughu iru lw qrw wr eh wkh fdvh/ lqglylgxdov kdyh wr=

41 kdyh shuihfw iruhvljkw/ dqg

51 eh lq d vlwxdwlrq zkhuh wkh| fdq xvh pruh prqwkv ri sdvvlyh XL wkdq wkh ixwxuh ohjlvodwlyh fkdqjh zloo doorz1

59

(30)

Iljxuh ;= H{shfwhg prqwkv ri uhpdlqlqj sdvvlyh XL +U, dffruglqj wr wkuhh glhuhqw h{shfwdwlrq prghov1

8 7 6 5 4 3 2 1 0 -1 -2 -3 -4 -5

Expected months left with perfect foresight a.

20 19 18 17 16 15 2 1 0 -1 -2 -3 -4 -5

Expected months left with system foresight b.

20 19 18 17 16 15 14 12 0 -1 -2 -3 -4 -5

Expected months left with no foresight c.

System change UI running out

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Wklv vshfldo vlwxdwlrq lv h{wuhpho| uduh lq wkh gdwd vhw zklfk L zloo xvh ehorz dqg L zloo wkhuhiruh qrw jr ixuwkhu lq p| dqdo|vlv ri wkh fdvh dqg lwv srvvleoh lpsolfdwlrqv1

5:

(31)

8 Gdwd

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odz1 Wkh gdwd lv qrw doorzhg rxwvlgh Vwdwlvwlfv Ghqpdun dqg Vwdwlvwlfv Ghq0 pdun uhpryhv wkh FSU0 qxpehu dv zhoo dv fkhfnv wkdw lqglylgxdov fdqqrw eh uhfrjqlvhg lq wkh gdwd ehiruh uhohdvlqj gdwd iru dqdo|vlv1

Vlqfh wkhvh phujhg gdwd vhwv duh pdlqwdlqhg dqg uhqhzhg e| Vwdwlvwlfv Ghqpdun rq d |hduo| edvlv/ lw lv srvvleoh wr wudfn lqglylgxdov lq vrph ri wkhvh gdwd vhwv pruh wkdq wzhqw| |hduv edfn lq wlph1 Wklv jlyhv uhvhdufkhuv d xqltxh dffhvv wr yhu| orqj dqg ghwdlohg sdqhov1 Vwdwlvwlfv Ghqpdun uhwdlqv wkh FSU qxpehuv ri dq| lqglylgxdov zkr dsshduv lq wkh phujhg gdwd vhwv1 Wklv pdnhv lw srvvleoh wr ixuwkhu phujh wkh glhuhqw gdwd vhwv erwk zlwk hdfk rwkhu exw dovr zlwk ydulrxv vxuyh|v dv zhoo dv rwkhu ruljlqdo dgplqlvwudwlyh gdwd vhwv zklfk duh qrw xvhg e| Vwdwlvwlfv Ghqpdun1

814 Gdwd vrxufhv

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5;

(32)

41 Xvh ri xqhpsor|phqw lqvxudqfh 51 Xvh ri dfwlydwlrq rhuv

61 Hpsor|phqw

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Lqirupdwlrqv rq dfwlydwlrq rq XL diwhu 4<<7 duh froohfwhg irup d uhjlvwhu fdoohg Uhjlvwhu rq Oderxu Pdunhw Phdvxuhv +DPIRUD,1 Wklv uhjlvwhu lv sul0 pdulo| xvhg iru oderxu pdunhw vxuyhloodqfh e| pxqlflsdolwlhv dqg plqlvwulhv1 Wkh lqirupdwlrq rq XL dfwlydwlrq lq wklv gdwd vhw frphv iurp d fruh gdwd vhw fdoohg wkh Oderxu Pdunhw Djhqf|*v Oderxu Pdunhw Srolf| Uhjlvwhu +DPSR,1 Wkh lqirupdwlrq lq wkh DPSR uhjlvwhu lv edvhg rq uhsruwv iurp wkh hpsor|0 phqw vhuylfhv dqg wkh xqhpsor|phqw ixqgv zklfk dgplqlvwudwh wkhvh vfkhphv1 Wkhvh uhsruwv vwdwh zkhq lqglylgxdov ehjlq dqg hqg dfwlydwlrq1 Wklv lqiru0 pdwlrq kdv lq wkh gdwd vhw ehhq wudqviruphg wr qxpehu ri gd|v lq dfwlydwlrq hdfk prqwk1

48Lq wkh iroorzlqj L zloo wudqvodwh wkh qdph ri wkh glhuhqw uhjlvwuhv exw xvh wkh Gdqlvk deeuhyldwlrqv/ khqfh wkh reylrxv glvsursruwlrq ehwzhhq wkh wzr1

5<

(33)

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Lqirupdwlrq rq hpsor|phqw lv wdnhq iurp d Vwdwlvwlfv Ghqpdun uhjlvwhu fdoohg LGD1 Wkh uhjlvwhu frqwdlqv wzr yduldeohv rq hpsor|phqw1 Rqh yduldeoh zklfk ghvfulehv lqglylgxdov* hpsor|phqw lq Qryhpehu prqwk hdfk |hdu/ dqg rqh yduldeoh zklfk ghvfulehv krz pdq| prqwkv rxw ri wkh |hdu lqglylgxdov kdyh ehhq hpsor|hg1 Lq rughu wr qg rxw zkhq lqglylgxdov duh hpsor|hg ryhu wkh prqwkv/ L kdyh xvhg lqirupdwlrq rq dq| rwkhu vwdwh zklfk lqglylgxdov frxog eh lq ryhu wkh |hdu dqg orfdwhg wkh hpsor|phqw lq wkh uhvlgxdo prqwkv1 Wklv lv srvvleoh vlqfh gdwd rq rwkhu vwdwhv vxfk dv glhuhqw ohdyh vfkhphv/

xqhpsor|phqw lqvxudqfh/ dfwlydwlrq/ hduo| uhwluhphqw/ vrfldo ehqhwv hwf1 duh dydlodeoh hlwkhu rq d prqwko| ru zhhno| edvlv1

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815 Frqvwuxfwlrq ri vdpsoh dqg yduldeohv

Iru wkh dqdo|vlv L kdyh xvhg d 43 shu fhqw vdpsoh ri wkh Gdqlvk srsxodwlrq ehwzhhq wkh djh 4: dqg 9: lq wkh dqdo|vlv1 Wkh 43 shu fhqw olplwdwlrq kdv ehhq lpsrvhg pdlqo| lq rughu wr vdyh uhvrxufhv vlqfh Vwdwlvwlf Ghqpdun/ dv douhdg|

63

(34)

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4<<9 dqg 4<<;1 Lq wdeoh 9 vrph ghvfulswlyhv duh suhvhqwhg rq wkh gdwd1 Wdeoh 4= Ghvfulswlyhv1

Yduldeoh Plq Pd{ Phdq Vwdqgdug

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4@vsrxvh 971:9

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64

(35)

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9 D ghvfulswlyh dqdo|vlv ri gdwd

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65

(36)

Iljxuh <= Wkh vkduh ri lqglylgxdov lq dfwlydwlrq dv d ixqfwlrq ri wlph uhpdlqlqj xqwlo dfwlydwlrq shulrg ehjlqv1

0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 1

23 21 19 17 15 13 11 9 7 5 3 1 -1 -3 -5 -7 -9

Remaining passive benefits months

Share in activation programmes

krzhyhu lqfuhdvlqj wkurxjkrxw wkh shulrg1 Wkh uhdvrqv iru wklv duh=

41 Lqglylgxdov kdyh wr kdyh pdgh dq dfwlrq sodq ehiruh vwduwlqj lq dfwlyd0 wlrq1 Iru prvw lqglylgxdov wklv pd| qrw kdsshq ehiruh wkh dfwlydwlrq shulrg kdv dfwxdoo| frpphqfhg1 Iru wklv uhdvrq dfwxdo sduwlflsdwlrq lq dfwlydwlrq zloo eh pryhg zhoo lqwr wkh dfwlydwlrq shulrg1

51 Lqglylgxdov pd| kdyh wr zdlw iru rshqlqjv dw hgxfdwlrq lqvwlwxwlrqv ru mre wudlqlqj srvlwlrqv1 Dovr hgxfdwlrq pd| vwduw dw vshflf gdwhv gxulqj wkh |hdu zklfk uhvxowv lq zdlwlqj shulrgv zlwkrxw dfwlydwlrq1

61 Xqwlo Dsulo 4<<8 lqglylgxdov lq wkh dfwlydwlrq shulrg frxog uhixvh wr sduwlflsdwh lq dfwlydwlrq iru xs wr rqh |hdu zlwkrxw orrvlqj wkh uljkw wr XL1

71 Gxh wr wkh vkhhu qxpehu ri lqglylgxdov zkr kdyh kdg wr eh doorfdwhg lq dfwlydwlrq wkh dxwkrulwlhv kdyh kdg wr sulrulwlvh ehwzhhq wkh xqhpsor|hg

66

(37)

Iljxuh 43= Ndsodq Ph|hu hvwlpdwhv ri wkh kd}dug rxw ri xqhpsor|phqw lq0 vxudqfh/ 4<<704<<;1

0,05 0,1 0,15 0,2 0,25 0,3 0,35

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47

Duration months

hazard values

lqglylgxdov1 Wklv kdv ehhq hvshfldoo| uhohydqw mxvw diwhu lqwurgxfwlrq ri uxoh fkdqjhv vxfk dv Mdqxdu| 4<<7/ Mxqh 4<<9 dqg Mdqxdu| 4<<;1 Dv ghvfulehg lq wkh vhfwlrq deryh/ wkh odz glfwdwhv wkdw wkh dfwlydwlrq hruw vkrxog eh wdujhwhg uvw rq wkh xqhpsor|hg lqglylgxdov zlwk wkh kljkhvw vhqlrulw| lq wkh xqhpsor|phqw v|vwhp1 Wklv phdqv wkdw hvshfldoo|

lqglylgxdov zkr kdyh mxvw hqwhuhg wkh dfwlydwlrq shulrg pd| eh deoh wr dyrlg dfwlydwlrq +li wkh| zdqw wr, iru d shulrg1

Iurp jxuh < lw lv qrw fohdu wkdw hqwhulqj wkh dfwlydwlrq shulrg vkrxog qhfhvvdulo| kdyh dq| vljqlfdqw prwlydwlrq hhfw1 Hyhq wkrxjk wkh dfwlydwlrq vkduh lv kljkhu lq wkh dfwlydwlrq shulrg/ lw lv vwloo idu ohvv wkdq 433 shu fhqw dqg lw wkhuhiruh vhhpv olnho| wkdw lqglylgxdov fdq dyrlg dfwlydwlrq li wkh|

zdqw wr1 Vwloo/ wkh phuh idfw wkdw lqglylgxdov lq wkh dfwlydwlrq shulrg pd| eh rhuhg dfwlydwlrq dqg zloo orrvh wkhlu XL hlwkhu lpphgldwho|⁴⁹ ru hyhqwxdoo|

49Diwhu Dsulo 4<<8

67

(38)

Iljxuh 44= Ndsodq Ph|hu hvwlpdwhv iru vshoov ehjlqqlqj lq 4<<7/ 4<<8 dqg 4<<91

0,05 0,1 0,15 0,2 0,25 0,3

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45

Duration month

Hazard values

1994 1995 1996

pd| lq xhqfh lqglylgxdov* uhvhuydwlrq zdjh dqg vhdufk ehkdylrxu1 Ilqdoo|/

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Lq jxuh 43 wkh kd}dug rxw ri xqhpsor|phqw iru doo lqglylgxdov lq wkh vdpsoh lv looxvwudwhg1 Wkh judsk glvsod|v d vkdus ghfolqh lq wkh kd}dug ryhu wkh uvw |hdu1 Diwhu wkh vhfrqg |hdu lw dsshduv wkdw wkh kd}dug lv lqfuhdvlqj zhdno|1 Lw lv qrw fohdu iurp wklv judsk wkdw lqglylgxdov gr uhdfw wr wkh df0 wlydwlrq shulrg/ exw wkh zhdn lqfuhdvh lq wkh kd}dug pd| lqglfdwh wkdw wkh|

gr1

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0 0,05 0,1 0,15 0,2 0,25

35 32 29 26 23 20 17 14 11 8 5 2 -1 -4 -7 -10 -13 -16 -19

Remaining Passive benefits months

Hazard values

sdvvlyh XL dqg wkhuhiruh hqwhu wkh jxuh dw 57 prqwkv uhpdlqlqj lqvwhdg ri 69 prqwkv uhpdlqlqj1

: Hpslulfdo Vshflfdwlrq dqg Hvwlpdwlrq

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k+w> U|> H|> [|, @ 4

4 . h{si|+w> U|> H|> [|,j>

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U@Hw.UM=

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