IZA DP No. 1300: Estimating the Threat Effect of Active Labour Market Programmes
Published as: 'The Threat Effect of Active Labour Market Programmes' in: Scandinavian Journal of Economics, 2008, 110 (2), 385 - 401
We combine two techniques to consistently estimate the effect of active labour market programmes and, in particular, active labour market policy regimes. Our aim is to explicitly estimate the threat effect of active labour market programmes. Based on Danish data (1998-2002) from administrative registers we find a strong and significantly positive threat effect. The threat effect is shown to reduce average unemployment duration by approximately three weeks. The implications of this result are discussed.