Evaluating Social Programs: Active Labor Market Policies and Social Insurance

Abstract: This thesis consists of three self-contained essays.Essay I evaluates two Swedish active labor market programs for youth during the early 1990s, namely youth practice and labor market training. A non-parametric matching approach is applied to estimate the average program effects. The results indicate either zero or negative effects of both programs on earnings, employment probability and the probability of entering education in the short run. The long-run effects are mainly zero or slightly positive. The results also suggest that youth practice was more effective – or ‘less harmful’ – than labor market training.Essay II examines the incentive effects caused by the interactions between unemploy-ment insurance (UI) and sickness insurance (SI), two important components of Swe-den’s social insurance system. There are two main topics of interest: how the sickness report rate and the length of the subsequent sick period among the unemployed are af-fected by (i) the limit of 300 workdays for UI benefits, and (ii) the difference in maxi-mum compensation between UI and SI benefits. Results obtained by duration analysis suggest that sick reports increase as the UI benefit expiration date approaches. There is also evidence of an incentive effect on the sick-report rate because SI offers greater compensation than UI. But neither of these factors seems to have a significant effect on the length of the sick period.Essay III (with Kenneth Carling) evaluates a youth measure introduced in the late 1990s, and still in practice. The main purpose of the measure is to prevent long-term unemployment by guaranteeing an assignment to some labor market program within 100 days of unemployment. To identify the effect of the measure, three conditions are used: The guarantee covers individuals aged 24 but not 25, one fifth of the municipali-ties do not provide the guarantee, and the guarantee existed in 1998 but not in 1997. No evidence is found that the measure did significantly improve the future labor market situation of the youth, which suggests that early intervention in the unemployment spell is not important.