The threat effect of mandatory programme participation in Finland - A study of activation reform of the labour market support system

Juha Tuomala

No 12, Working Papers from VATT Institute for Economic Research

Abstract: This study focuses on the threat effect of the activation reform of the Finnish labour market support system in 2006. In practice, participation in the labour market programmes became mandatory for the long-term recipients of the labour market support. Mandatory programme participation may provide incentive for some individuals to look for work in order to avoid the training programmes. The study examines whether the activation reform of 2006 encouraged individuals in the target group to look for employment. According to the results mandatory programme participation has no effect on the probability to find a job or to leave labour market support for some other reason. Conversely, the long-term recipients' participation in the labour market programmes has increased considerably due to the activation reform.

Keywords: Labour market support; activation; unobserved heterogeneity; Labour market; Työmarkkinat; Labor market and policies promoting economic growth; Työmarkkinat ja kasvua tukeva politiikka; J640 - Unemployment: Models; Duration; Incidence; and Job Search (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-lab
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