Stepping stone or exit path: experimental evidence on training the long‐term unemployed

Abstract

This study estimates the effects of an employment programme for disadvantaged unemployed individuals. The programme emphasized on‐the‐job training and contracting the unemployed for a few paid weekly work hours as a stepping stone into the labour market. Evaluated through a randomized controlled trial with 3,727 participants, the programme was found to accelerate transitions into part‐time work. Contrary to its intention, it permanently increased the share of participants receiving disability pensions among most disadvantaged groups. To explain this finding, we suggest that training, while enhancing productivity for some, simultaneously provided information of employability used in the assessment of disability pension eligibility.