Scandinavian Working Papers in Economics

Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 2011:7: The relative efficiency of active labour market policy: evidence from a social experiment and non-parametric methods

Johan Vikström (), Michael Rosholm () and Michael Svarer ()
Additional contact information
Johan Vikström: IFAU - Institute for Labour Market Policy Evaluation, Postal: Box 513, SE-751 20 Uppsala, Sweden
Michael Rosholm: Department of Economics and Business, Aarhus University
Michael Svarer: Department of Economics and Business, Aarhus University

Abstract: We reanalyze the effects of a Danish active labour market program social experiment, that included a range of sub-treatments, including monitoring, job search assistance and training. Previous studies have shown that the overall effect of the experiment is positive. We apply newly developed non-parametric methods to determine which of the individual policies that explains the positive effect. The use of non-parametric methods to separate sub-treatment effects is important from a methodological point of view, since the alternative, namely parametric/distributional assumptions, is in conflict with the concept of experimental evidence. Our results are highly relevant in a policy perspective, as optimal labour market policy design requires knowledge on the effectiveness of specific policy measures.

Keywords: Active labour market policy; treatment effect; non-parametric bounds

JEL-codes: C14; C41; C93

29 pages, June 27, 2011

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