Active labour market programmes and reservation wages: it is a hazard

Kenneth Sørensen

Applied Economics Letters, 2017, vol. 24, issue 9, 589-593

Abstract: This article uses a randomized controlled trial to show that positive earnings effects of a labour market programme can be caused by either a faster return to employment together with a lowering of reservation wages or a more moderate return to employment together with an increase in reservation wages. I model wages and unemployment duration simultaneously in a hazard framework allowing for unobserved heterogeneity.

Date: 2017
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DOI: 10.1080/13504851.2016.1213358

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