Program evaluation

Program evaluation provides an overview of the effectiveness of a variety of policies that have been tested in diverse settings across various countries. The knowledge provided suggests whether or not the individual and the economy fair better without the measures studied.

Subject Editor

Michael Rosholm Aarhus University, Denmark, and IZA, Germany

Associate Editor(s)

Marco Caliendo University of Potsdam, and IZA, Germany

Knut Røed Ragnar Frisch Centre for Economic Research, University of Oslo, Norway, and IZA, Germany

Alexander Spermann University of Freiburg, and IZA, Germany

Conny Wunsch University of Basel, Switzerland, and IZA, Germany

  • Articles

Short-time work compensations and employment

Temporary government schemes can have a positive economic effect

10.15185/izawol.11 11 Cahuc, P

by Pierre Cahuc

Government schemes that compensate workers for the loss of income while they are on short hours (known as short-time work compensation schemes) make it easier for employers to temporarily reduce hours worked so that labor is better matched to output requirements. Because the employers do not lay off these staff, the schemes help to maintain permanent employment levels during recessions. However, they can create inefficiency in the labor market, and might limit labor market access for freelancers and those looking to work part-time.

Recruiting intensity

Recruiting intensity is critical for understanding fluctuations in the labor market

10.15185/izawol.21 21 Faberman, R

by R. Jason Faberman

When hiring new workers, employers use a wide variety of different recruiting methods in addition to posting a vacancy announcement, such as adjusting education, experience or technical requirements, or offering higher wages. The intensity with which employers make use of these alternative methods can vary widely depending on a firm’s performance and with the business cycle. In fact, persistently low recruiting intensity partly helps to explain the sluggish pace of the growth of jobs in the US economy following the Great Recession of 2007–2009.

Public works programs in developing countries have the potential to reduce poverty

The success of public works programs in reducing poverty depends on their design and implementation—in practice, they do better as safety nets

10.15185/izawol.25 25 Zimmermann, L

by Laura Zimmermann

Public works programs in developing countries can reduce poverty in the long term and help low-skilled workers cope with economic shocks in the short term. But success depends on a scheme’s design and implementation. Key design factors are: properly identifying the target population; selecting the right wage; and establishing efficient implementation institutions. In practice, rationing, corruption, mismanagement, and other implementation flaws often limit the effectiveness of public works programs.

Temporary agency work

Temporary agency work is not generally a stepping-stone to regular employment

10.15185/izawol.27 27 Houseman, S

by Susan N. Houseman

Temporary agency work has expanded in most advanced economies since the 1990s, but its growth has been controversial. Some argue that these jobs offer experience and contact with potential employers, serving as a path to regular employment, particularly for low-skilled workers. Others view them as traps, fostering low-wage, unstable employment and providing little experience and few contacts.

Do firms benefit from apprenticeship investments?

Why spending on occupational skills can yield economic returns to employers

10.15185/izawol.55 55 Lerman, R

by Robert Lerman

Economists once believed firms do not pay to develop occupational skills that workers could use in other, often competing, firms. Researchers now recognize that most firms benefit from investing in apprenticeship training. Evidence indicates that financial returns to firms vary. Some recoup their investment within the apprenticeship period, while others see their investment pay off only after accounting for reduced turnover, recruitment, and initial training costs. Generally, the first year of apprenticeships involves significant costs, but subsequently, the apprentice’s contributions exceed his/her wages and supervisory costs. Most participating firms view apprenticeships as offering certainty that all workers have the same high level of expertise and ensuring a supply of well-trained workers during sudden increases in demand and to fill leadership positions.

Do youth mentoring programs change the perspectives and improve the life opportunities of at-risk youth?

While most effects are positive, they tend to be modest and fade over time—in addition, some mentoring programs can backfire

10.15185/izawol.62 62 Rodríguez-Planas, N

by Núria Rodríguez-Planas

Mentoring programs such as Big Brothers Big Sisters of America have been providing positive role models and building social skills for more than a century. However, most formal mentoring programs are relatively novel and researchers have only recently begun to rigorously evaluate their impact on changing at-risk youth’s perspectives and providing opportunities for them to achieve better life outcomes. While a variety of mentoring and counseling programs have emerged around the world in recent years, knowledge of their effectiveness remains incomplete.

The effect of early retirement schemes on youth employment

Keeping older workers in the workforce longer not only doesn’t harm the employment of younger workers, but might actually help both

10.15185/izawol.70 70 Böheim, R

by René Böheim

The fiscal sustainability of state pensions is a central concern of policymakers in nearly every advanced economy. Policymakers have attempted to ensure the sustainability of these programs in recent decades by raising retirement ages. However, there are concerns that keeping older workers in the workforce for longer might have negative consequences for younger workers. Since youth unemployment is a pressing problem throughout advanced and developing countries, it is important to consider the impact of these policies on the employment prospects of the young.

Teenage childbearing and labor market implications for women

Teenage childbearing is less a cause of inferior labor market outcomes for women than a marker of other social problems in a girl’s life

10.15185/izawol.28 28 Levine, P

by Phillip B. Levine

It is not difficult to find statistics showing that 
teenage childbearing is associated with poor labor market outcomes, but why is this the case? Does having a child as a teenager genuinely affect a 
woman’s economic potential—or is it simply a marker of problems she might already be facing as a result of her social and family background? The answer 
to this question has important implications for 
policy measures that could be taken to improve women’s lives.

Childcare subsidy policy: What it can and cannot accomplish

What are the implications of childcare subsidies for care quality, family well-being, and child development?

10.15185/izawol.43 43 Tekin, E

by Erdal Tekin

Most public expenditure on childcare in the US 
is made through a federal program, the Child Care and Development Fund (CCDF), established as 
part of landmark welfare reform legislation in 1996. The main goal of the reform was to increase employment and reduce welfare dependence among low-income families. Childcare subsidies have been effective in enabling parents to work, but apparently at some cost to the well-being of parents and children.

The impact of monitoring and sanctioning on unemployment exit and job-finding rates

Job search monitoring and benefit sanctions generally reduce unemployment duration and boost entry to employment in the short term

10.15185/izawol.49 49 McVicar, D

by Duncan McVicar

Unemployment benefits often reduce incentives to search for a job. Policymakers have responded to this behaviour by setting minimum job search requirements, by monitoring to check that unemployment benefit recipients are engaged in the appropriate level of job search activity, and by imposing sanctions for infractions. Empirical studies consistently show that job search monitoring and benefit sanctions reduce unemployment duration and increase job entry in the short term. There is some evidence that longer-term effects of benefit sanctions may be negative.

Does minimum age of employment regulation reduce child labor?

The global fight against child labor might be better served by focusing less on existing laws and more on implementation and enforcement

10.15185/izawol.73 73 Edmonds, E

by Eric V. Edmonds

Regulation of the minimum age of employment is the dominant tool used to combat child labor globally. If enforced, these regulations can change the types of work in which children participate, but minimum age regulations are not a useful tool to promote education. Despite their nearly universal adoption, recent research for 59 developing countries finds little evidence that these regulations influence child time allocation in a meaningful way. Going forward, coordinating compulsory schooling laws and minimum age of employment regulations may help maximize the joint influence of these regulations on child time allocation, but these regulations should not be the focus of the global fight against child labor.

Do case workers help the unemployed?

Evidence for making a cheap and effective twist to labor market policies for unemployed workers

10.15185/izawol.72 72 Rosholm, M

by Michael Rosholm

Organisation for Economic Co-operation and Development countries spend, on average, an equivalent of 0.4% of their gross domestic product on active and passive labor market policies. This is a non-negligible sum, especially in times of strained government budgets. Meetings with case workers—who can provide advice and information on what jobs to look for, and how to search, and give moral support, as well as monitor search intensity—are a simple and effective option for policymakers to help the unemployed find work.

How to improve participation in social assistance programs

Government agencies can lower barriers that impede people’s take-up of social assistance

10.15185/izawol.104 104 Ribar, D

by David C. Ribar

Social assistance programs are intended to improve people’s well-being. However, that goal is undermined when eligible people fail to participate. Reasons for non-participation can include inertia, lack of information, stigma, the time and “hassle” associated with applications and program compliance, as well as some programs’ non-entitlement status. Differences in participation across programs, and over time, indicate that take-up rates can respond both positively and negatively to policy change. However, there are clearly very identifiable ways in which relevant agencies can improve take-up.

Youth labor market interventions

Comprehensive programs that focus on skills can reduce unemployment and upgrade skills in OECD countries

10.15185/izawol.106 106 Kluve, J

by Jochen Kluve

Reducing youth unemployment and generating more and better youth employment opportunities are key policy challenges worldwide. Active labor market programs for disadvantaged youth may be an effective tool in such cases, but the results have often been disappointing in Organisation for Economic Co-operation and Development (OECD) countries. The key to a successful youth intervention program is comprehensiveness, comprising multiple targeted components, including job-search assistance, counseling, training, and placement services. Such programs can be expensive, however, which underscores the need to focus on education policy and earlier interventions in the education system.

Does vocational training help young people find a (good) job?

Systems combining structured learning on the job with classroom training can ease youth unemployment

10.15185/izawol.112 112 Eichhorst, W

by Werner Eichhorst

Youth unemployment has increased in many industrialized countries following the recent global recession. However, this reflects not only the cyclical shock, but also the crucial role of institutions in structuring the transition from school to work. Vocational training, in particular in a dual form combining vocational schooling and structured learning on-the-job, is often considered to be one of the most important policy solutions in combating youth unemployment. The evidence available supports this perception, but the institutional requirements of a successful training system also have to be taken into account from a policy perspective.

Is training effective for older workers?

Training programs that meet the learning needs of older workers can improve their employability

10.15185/izawol.121 121 Picchio, M

by Matteo Picchio

The labor market position of older workers is cause for concern in many industrialized countries. Rapid population aging is challenging pension systems. The recent economic crisis has forced many older adults out of the workforce, into either pre-retirement or non-employment. Encouraging people to work longer and fostering the employability of older workers have become priorities for policymakers. Training specifically designed for older workers might help attain these goals, since it may refresh human capital and reduce the pay–productivity gap. Training older workers might also benefit employers and society as a whole.

Is unconditional basic income a viable alternative to other social welfare measures?

Countries give basic education and health care to everyone, and for good reasons—why not basic income?

10.15185/izawol.128 128 Colombino, U

by Ugo Colombino

Automation and globalization have brought about a tremendous increase in productivity, but also accelerated job destruction, systemic risks, and greater income inequality. Current social policies may not be adequate for achieving the goals of redistributing the gains from automation and globalization, providing efficient buffers against economic shocks, and advancing the reallocation of jobs and skills. Under certain circumstances, an unconditional basic income might be a better alternative for achieving those goals. It is simple, transparent, and has low administrative costs, though it may require higher taxes.

Measuring the cost of children

Knowing the real cost of children is important for crafting better
 economic policy

10.15185/izawol.132 132 Donni, O

by Olivier Donni

The cost of children is a critical parameter used in determining many economic policies. For instance, correctly setting the tax deduction for families with children requires assessing the true household cost of children. Evaluating child poverty at the individual level requires making a clear distinction between the share of family resources received by children and that received by parents. The standard ad hoc measures (equivalence scales) used in official publications to measure the cost of children are arbitrary and are not informed by any economic theory. However, economists have developed methods that are grounded in economic theory and can replace ad hoc measures.

Childcare choices and child development

Generous parental leave and affordable, high-quality childcare can foster children’s abilities

10.15185/izawol.134 134 Del Boca, D

by Daniela Del Boca

The economic and psychological literatures have demonstrated that early investments (private and public) in children can significantly increase cognitive outcomes in the short and long term and contribute to success later in life. One of the most important of these inputs is maternal time. Women’s participation in the labor market has risen rapidly in most countries, implying that mothers spend less time with their children and that families rely more on external sources of childcare. This trend has raised concerns, and an intense debate in several countries has focused on the effectiveness of childcare policies.

Who benefits from firm-sponsored training?

Firm-sponsored training benefits both workers and firms through higher wages, increased productivity and innovation

10.15185/izawol.145 145 Dostie, B

by Benoit Dostie

Workers participating in firm-sponsored training receive higher wages as a result. But given that firms pay the majority of costs for training, shouldn’t they also benefit? Empirical evidence shows that this is in fact the case. Firm-sponsored training leads to higher productivity levels and increased innovation, both of which benefit the firm. Training can also be complementary to, and enhance, other types of firm investment, particularly in physical capital, such as information and communication technology (ICT), and in organizational capital, such as the implementation of high-performance workplace practices.

Counting on count data models

Quantitative policy evaluation can benefit from a rich set of econometric methods for analyzing count data

10.15185/izawol.148 148 Winkelmann, R

by Rainer Winkelmann

Often, economic policies are directed toward outcomes that are measured as counts. Examples of economic variables that use a basic counting scale are number of children as an indicator of fertility, number of doctor visits as an indicator of health care demand, and number of days absent from work as an indicator of employee shirking. Several econometric methods are available for analyzing such data, including the Poisson and negative binomial models. They can provide useful insights that cannot be obtained from standard linear regression models. Estimation and interpretation are illustrated in two empirical examples.

Can hiring subsidies benefit the unemployed?

Hiring subsidies can be a very cost-effective way of helping the unemployed, but only when they are carefully targeted

10.15185/izawol.163 163 Brown, A

by Alessio J. G. Brown

Long-term unemployment can lead to skill attrition and have detrimental effects on future employment prospects, particularly following periods of economic crises when employment growth is slow and cannot accommodate high levels of unemployment. Addressing this problem requires the use of active labor market policies targeted at the unemployed. In this context, hiring subsidies can provide temporary incentives for firms to hire unemployed workers and, when sensibly targeted, are a very cost-effective and efficient means of reducing unemployment, during both periods of economic stability and recovery.

The impacts of shortening secondary school duration

Shortening secondary school duration may increase the skilled workforce in aging societies

10.15185/izawol.166 166 Thomsen, S

by Stephan L. Thomsen

The main goal of secondary school education in developed countries is to prepare students for higher education and the labor market. That demands high investments in study duration and specialized fields to meet rising skill requirements. However, these demands for more education are in opposition to calls for early entry to the labor market, to lengthen working lives to meet the rising costs associated with an aging population and to enable the intergenerational transfer of skills. One way to lengthen working lives is to shorten the duration of secondary school, an option recently implemented in Canada and Germany. The empirical evidence shows mixed effects.

Entrepreneurship for the poor in developing countries

Well-designed entrepreneurship programs show promise for improving earnings and livelihoods of poor workers

10.15185/izawol.167 167 Cho, Y

by Yoonyoung Cho

Can entrepreneurship programs be successful labor market policies for the poor? A large share of workers in developing countries are self-employed in low-paying work or engage in low-return entrepreneurial activities that keep these workers in poverty. Entrepreneurship programs provide business training and access to finance, advisory, and networking services with the aim of boosting workers’ earnings and reducing poverty. Programs vary in design, which can affect their impact on outcomes. Recent studies have identified some promising approaches that are yielding positive results, such as combining training and financial support.

Should severance pay be consistent for all workers?

Single, open-ended contracts with severance pay smoothly rising with seniority can decrease both unemployment and job losses

10.15185/izawol.174 174 García Pérez, J

by J. Ignacio García Pérez

The trend towards labor market flexibility in Europe has typically involved introducing legislation that makes it easier for firms to issue temporary contracts with low firing costs, while not changing the level of protection that is in place for permanent jobs. This has created a strong “dualism” in some European labor markets, which might affect turnover, wage setting, and human capital accumulation. In view of this, some economists propose replacing the existing system of temporary and permanent contracts by a single open-ended contract for new hires, with severance pay smoothly increasing with tenure on the job.

The educational effects of school start times

Delaying secondary school start times can be a cost-effective policy to improve students’ grades and test scores

10.15185/izawol.181 181 Shapiro, T

by Teny Maghakian Shapiro

The combination of changing sleep patterns in adolescence and early school start times leaves secondary school classrooms filled with sleep-deprived students. Evidence is growing that having adolescents start school later in the morning improves grades and emotional well-being, and even reduces car accidents. Opponents cite costly adjustments to bussing schedules and decreased time after school for jobs, sports, or other activities as reasons to retain the status quo. While changing school start times is not a costless policy, it is one of the easiest to implement and least expensive ways of improving academic achievement.

Active labor market policies and crime

Unemployment increases crime among youth, while active labor market policies can mitigate the problem

10.15185/izawol.185 185 Tranaes, T

by Torben Tranaes

Active labor market programs continue to receive high priority in wealthy countries despite the fact that the benefits appear small relative to the costs. This apparent discrepancy suggests that the programs may have a broader purpose than simply increasing employment—for instance, preventing anti-social behavior such as crime. Indeed, recent evidence shows that participation in active labor market programs reduces crime among unemployed young men. The existence of such effects could explain why it is the income-redistributing countries with greater income equality that spend the most on active labor market programs.

The effects of wage subsidies for older workers

Wage subsidies to encourage employers to hire older workers are often ineffective

10.15185/izawol.189 189 Boockmann, B

by Bernhard Boockmann

Population aging in many developed countries has motivated some governments to provide wage subsidies to employers for hiring or retaining older workers. The subsidies are intended to compensate for the gap between the pay and productivity of older workers, which may discourage their hiring. A number of empirical studies have investigated how wage subsidies influence employers’ hiring and employment decisions and whether the subsidies are likely to be efficient. To which groups subsidies should be targeted and how the wage subsidy programs interact with incentives for early retirement are open questions.

Class size: Does it matter for student achievement?

Smaller classes are often associated with increased achievement, but the evidence is far from universal

10.15185/izawol.190 190 Jepsen, C

by Christopher Jepsen

Numerous economic studies have considered the relationship between class size and student achievement, the majority of which have focused on elementary schools in the US and Europe. While the general finding is that smaller classes are associated with increased student achievement, a few high-quality studies find no relationship. Further, empirical research on the costs and benefits of smaller classes concludes that other education policies, such as tutoring, early childhood programs, or improving teacher quality would be better investments.

Immigrants in the classroom and effects on native children

Having immigrant children in the classroom may sometimes, but not always, harm educational outcomes of native children

10.15185/izawol.194 194 Jensen, P

by Peter Jensen

Many countries are experiencing increasing inflows of immigrant students. This raises concerns that having a large share of students for whom the host country language is not their first language may have detrimental effects on the educational outcomes of native children. However, the evidence is mixed, with some studies finding negative effects, and others finding no effects. Whether higher concentrations of immigrant students have an effect on native students differs across countries according to factors such as organization of the school system and immigrants’ socio-economic background.

Should unemployment insurance cover partial unemployment?

Time-limited benefits may yield significant welfare gains and help underemployed part-time workers move to full-time employment

10.15185/izawol.199 199 Ek Spector, S

by Susanne Ek Spector

A considerable share of the labor force consists of underemployed part-time workers: employed workers who, for various reasons, are unable to work as much as they would like to. Offering unemployment benefits to part-time unemployed workers is controversial. On the one hand, such benefits can strengthen incentives to take a part-time job rather than remain fully unemployed, thus raising the probability of obtaining at least some employment. On the other hand, these benefits weaken incentives for part-time workers to look for full-time employment. It is also difficult to distinguish people who work part-time by choice from those who do so involuntarily.

The role of preschool in reducing inequality

Preschool improves child outcomes, especially for disadvantaged children

10.15185/izawol.219 219 Waldfogel, J

by Jane Waldfogel

Children from disadvantaged families have lower levels of school readiness when they enter school than do children from more advantaged families. Many countries have tried to reduce this inequality through publicly provided preschool. Evidence on the potential of these programs to reduce inequality in child development is now quite strong. Long-term studies of large publicly funded programs in Europe and Latin America, and newer studies on state and local prekindergarten programs implemented more recently in the US, find that the programs do improve outcomes for young children, particularly for those from disadvantaged families.

What is the economic value of literacy and numeracy?

Basic skills in literacy and numeracy are essential for success in the labor market

10.15185/izawol.229 229 Vignoles, A

by Anna Vignoles

Even in OECD countries, where an increasing proportion of the workforce has a university degree, the value of basic skills in literacy and numeracy remains high. Indeed, in some countries the return for such skills, in the form of higher wages, is sufficiently large to suggest that they are in high demand and that there is a relative scarcity. Policymakers need robust evidence in order to devise interventions that genuinely improve basic skills, not just of new school leavers entering the market, but also of the existing workforce. This would lead to significant improvements in the population that achieves a minimum level of literacy and numeracy.

Parental employment and children’s academic achievement

Quality of parental time spent with children is more important than quantity

10.15185/izawol.231 231 Schildberg-Hörisch, H

by Hannah Schildberg-Hörisch

Female labor market participation rates have increased substantially in many countries over the last decades, especially those of mothers with young children. This trend has triggered an intense debate about its implications for children’s well-being and long-term educational outcomes. The overall effect of maternal and paternal employment on children’s cognitive and educational attainment is not obvious: on the one hand, children may benefit from higher levels of family income, on the other hand, parental employment reduces the amount of time parents spend with their children.

Start-up subsidies for the unemployed: Opportunities and limitations

Financial support during business start-up is an effective active labor market policy tool for escaping unemployment

10.15185/izawol.200 200 Caliendo, M

by Marco Caliendo

Turning unemployment into self-employment is a suitable alternative to traditional active labor market policies in many developed countries. Start-up subsidies can assist unemployed workers in setting up their own business. This option can be especially interesting for people whose work is undervalued in paid employment or in situations where job offers are limited because of group-specific labor market constraints or structural changes. Furthermore, start-up subsidies are potentially associated with a “double dividend” if the subsidized businesses prosper, strengthen the economy, and create additional jobs in the future.

Job search requirements for older unemployed workers

How do they affect re-employment rates and flows into states of inactivity for older unemployed workers?

10.15185/izawol.235 235 Bloemen, H

by Hans Bloemen

Many OECD countries have, or have had, a policy that exempts older unemployed people from the requirement to search for a job. An aging population and low participation by older workers in the labor market increasingly place public finances under strain, and spur calls for policy measures that activate labor force participation by older workers. Introducing job search requirements for the older unemployed aims to increase their re-employment rates. Abolishing the exemption from job search requirements for these workers has been shown to initiate higher outflow rates from unemployment for the older unemployed.

Do childcare policies increase maternal employment?

Subsidized childcare fosters maternal employment, but employment status, childcare quality, and availability matter

10.15185/izawol.241 241 Vuri, D

by Daniela Vuri

Women’s labor force participation has rapidly increased in most countries, but mothers still struggle to achieve a satisfactory work−life balance. Childcare allows the primary caregiver, usually the mother, to take time away from childrearing for employment. Family policies that subsidize childcare and increase its availability have different effects on female labor supply across countries. For policymakers to determine how well these policies work, they should consider that policy effectiveness may depend on country-specific pre-reform female employment and earnings, and childcare availability, costs, and quality.

Do in-work benefits work for low-skilled workers?

To boost the employment rate of the low-skilled trapped in inactivity is it sufficient to supplement their earnings?

10.15185/izawol.246 246 Van der Linden, B

by Bruno Van der Linden

High risk of poverty and low employment rates are widespread among low-skilled groups, especially in the case of some household compositions (e.g. single mothers). “Making-work-pay” policies have been advocated for and implemented to address these issues. They alleviate the above-mentioned problems without providing a disincentive to work. However, do they deliver on their promises? If they do reduce poverty and enhance employment, can we further determine their effects on indicators of well-being, such as mental health and life satisfaction, or on the acquisition of human capital?

Age at school entry: How old is old enough?

A child’s age at school entry matters, and the implications of policy changes can have long-lasting effects

10.15185/izawol.247 247 Dhuey, E

by Elizabeth Dhuey

Laws on age at school entry affect student achievement and often change for a number of reasons. Older students are more mature and ready to learn. This can have positive impacts on academic, employment, and earnings outcomes. The costs of holding children back include another year of childcare expenses or income forgone by the caregiver parent. Entering the workforce one year later also has implications for lifetime earnings and remittances to governments. School-entry policies could be a useful tool in increasing student achievement, but the short- and long-term impacts need to be better understood.

Are part-time workers less productive and underpaid?

The impact of part-time workers on firms’ productivity is unclear, and lower wages depend mainly on occupation and sector

10.15185/izawol.249 249 Garnero, A

by Andrea Garnero

About one in five workers across OECD countries is employed part-time, and the share has been steadily increasing since the beginning of the economic and financial crisis in 2007. Part-time options play an important economic role by providing more flexible working arrangements for both workers and firms. Part-time employment has also contributed substantially to increasing the employment rate, especially among women. However, part-time work comes at a cost of lower wages for workers, mainly because part-time jobs are concentrated in lower paying occupations and sectors, while the impact on firms’ productivity is still not very clear.

How can temporary work agencies provide more training?

Staffing agencies could play a more prominent role in the provision of training for the low qualified and previously unemployed

10.15185/izawol.251 251 Spermann, A

by Alexander Spermann

Temporary work agencies use training as a recruitment and retention argument when qualified labor is scarce. However, short job assignments present a major obstacle for employers and employees to increase investment in training. As temporary agency workers are mainly low-qualified and often previously unemployed, paid work in combination with training should lead to more sustainable employment. Adjustments in labor market institutions could make the provision of training more attractive for both staffing agencies and temporary agency workers.

Financing high-potential entrepreneurship

Government should create an enabling environment—for entrepreneurs and investors—rather than try to pick “winners”

10.15185/izawol.252 252 Nanda, R

by Ramana Nanda

Entrepreneurship is essential to job creation and to productivity growth and therefore is an important matter for government policy. However, policymakers face a difficult challenge because successful growth for a few firms—which cannot easily be identified in advance—is accompanied by widespread failure for most other new firms. Predicting which firms will fail and which will succeed is nearly impossible. Instead of futilely trying to pick winners, governments can play a useful role in facilitating the growth of the most promising firms by setting the conditions for efficient trial-and-error experimentation across firms.

Is maternal employment related to childhood obesity?

Institutions and policies affect whether working mothers raise heavier children

10.15185/izawol.267 267 Gwozdz, W

by Wencke Gwozdz

Childhood obesity has been rising steadily in most parts of the world. Popular speculation attributes some of that increase to rising maternal employment. Employed mothers spend less time at home and thus less time with their children, whose diets and physical activity may suffer. Also, children of working mothers may spend more time in the care of others, whose childcare quality may vary substantially. While a majority of US studies support this hypothesis and have clear policy implications, recent studies in other countries are less conclusive, largely because institutional arrangements differ but also because methodologies do.

Labor market policies, unemployment, and identity

Policies to help the unemployed can affect feelings of identity and well-being, so measures need to be evaluated carefully

10.15185/izawol.270 270 Schöb, R

by Ronnie Schöb

Unemployment not only causes material hardship but can also affect an individual’s sense of identity (i.e. their perception of belonging to a specific social group) and, consequently, feelings of personal happiness and subjective well-being. Labor market policies designed to help the unemployed may not overcome their misery: wage subsidies can be stigmatizing, workfare may not provide the intended incentives, and flexicurity (a system that combines a flexible labor market with active policy measures), may increase uncertainty. Policies aimed at bringing people back to work should thus take the subjective well-being of the affected persons more into consideration.

Employment and rebellion in conflicted and fragile states

Jobs programs may not reduce rebellion

10.15185/izawol.271 271 Gilligan, M

by Michael J. Gilligan

In addition to the heart-breaking human costs, violent civil rebellion is a cause of chronic economic under-development. Employment programs with former combatants and at-risk youth have improved their livelihoods, but not their support for non-violence and respect for law. Rebel groups provide security and social benefits that formal employment does not offer, possibly making switching out of rebellion into formal employment unappealing. However, a jobs program that addressed the psycho-social motivations to join rebel groups resulted in significant reductions in crime and violence. This is an important step forward in our understanding of how to lure people away from violent rebellion.

Can higher education reduce inequality in developing countries?

Expanding higher education might solve rising youth unemployment and widening inequality in Africa

10.15185/izawol.273 273 Shimeles, A

by Abebe Shimeles

Developing countries often face two well-known structural problems: high youth unemployment and high inequality. In recent decades, policymakers have increased the share of government spending on education in developing countries to address both of these issues. The empirical literature offers mixed results on which type of education is most suitable to improve gainful employment and reduce inequality: is it primary, secondary, or tertiary education? Investigating recent literature on the returns to education in selected developing countries in Africa can help to answer this question.

The dynamics of training programs for the unemployed

Job-search training and occupational skills training are both effective

10.15185/izawol.277 277 Osikominu, A

by Aderonke Osikominu

Time plays an important role in both the design and interpretation of evaluation studies of training programs. While the start and duration of a training program are closely linked to the evolution of job opportunities, the impact of training programs in the short and longer term changes over time. Neglecting these “dynamics” could lead to an unduly negative assessment of the effects of certain training schemes. Therefore, a better understanding of the dynamic relationship between different types of training and their respective labor market outcomes is essential for a better design and interpretation of evaluation studies.

Parental leave and maternal labor supply

Parental leave increases the family–work balance, but may have negative impacts on mothers’ careers

10.15185/izawol.279 279 Kunze, A

by Astrid Kunze

Numerous studies have investigated whether the provision and generosity of parental leave affects the employment and career prospects of women. Parental leave systems typically provide either short unpaid leave mandated by the firm, as in the US, or more generous and universal leave mandated by the government, as in Canada and several European countries. Key economic policy questions include whether, at the macro level, female employment rates have increased due to parental leave policies; and, at the micro level, whether the probability of returning to work and career prospects have increased for mothers after childbirth.

Public or private job placement services—Are private ones more effective?

Analyzed public employment agencies were at least equally as successful as private ones in placing unemployed workers

10.15185/izawol.285 285 Stephan, G

by Gesine Stephan

Expenditures on job placement and related services make up a substantial share of many countries’ GDP. Contracting out to private providers is often proposed as a more efficient alternative to the state provision of placement services. However, the responsible state agency has to design and monitor sufficiently complete contracts to ensure that the private contractors deliver the desired quality of services. None of the recent empirical evidence indicates that contracting out is necessarily more effective or more efficient than public employment services.

How to minimize lock-in effects of programs for unemployed workers

Appopriate timing and targeting of activation programs for the unemployed can help improve their cost-effectiveness

10.15185/izawol.288 288 Wunsch, C

by Conny Wunsch

Activation programs, such as job search assistance, training, or work experience programs for unemployed workers, typically initially produce negative employment effects. These so-called “lock-in effects” occur because participants spend less time and effort on job search activities than non-participants. Lock-in effects need to be offset by sufficiently large post-participation employment or earnings for the programs to be cost-effective. They represent key indirect costs that are often more important than direct program costs. The right timing and targeting of these programs can improve their cost-effectiveness by reducing lock-in effects.

How manipulating test scores affects school accountability and student achievement

Standardized testing can create incentives to manipulate test results and generate misleading indicators for public policy

10.15185/izawol.295 295 Battistin, E

by Erich Battistin

Standardized testing has become the accepted means of measuring a school’s quality. However, the associated rise in test-based accountability creates incentives for schools, teachers, and students to manipulate test scores. Illicit behavior may also occur in institutional settings where performance standards are weak. These issues are important because inaccurate measurement of student achievement leads to poor or ineffective policy conclusions. The consequences of mismeasured student achievement for policy conclusions have been documented in many institutional contexts in Europe and North America, and guidelines can be devised for the future.

Do schooling reforms improve long-term health?

It is difficult to find consistent evidence that schooling reforms provide health benefits

10.15185/izawol.306 306 Madden, D

by David Madden

A statistical association between more education and better health outcomes has long been observed, but in the absence of experimental data researchers have struggled to find a causal effect. Schooling reforms such as raising school leaving age, which have been enacted in many countries, can be viewed as a form of natural experiment and provide a possible method of identifying such an effect. However, the balance of evidence so far is that these reforms have had little impact on long-term health. Thus, policymakers should be cautious before anticipating a health effect when introducing reforms of this nature.

Can universal preschool increase the labor supply of mothers?

The success of universal preschool education depends crucially on the policy parameters and specific country context

10.15185/izawol.312 312 Cattan, S

by Sarah Cattan

Since the 1970s, many countries have established free or highly subsidized education for all preschool children in the hope of improving children’s learning and socio-economic life chances and encouraging mothers to join the labor force. Evaluations reveal that these policies can increase maternal employment in the short term and may continue to do so even after the child is no longer in preschool by enabling mothers to gain more job skills and increase their attachment to the labor force. However, their effectiveness depends on the policy design, the country context, and the characteristics of mothers of preschoolers.

What effect do vocational training vouchers have on the unemployed?

Vouchers can create a market for training but may lengthen participants’ unemployment duration

10.15185/izawol.316 316 Strittmatter, A

by Anthony Strittmatter

The objective of providing vocational training for the unemployed is to increase their chances of re-employment and human capital accumulation. In comparison to mandatory course assignment by case workers, the awarding of vouchers increases recipients’ freedom to choose between different courses and makes non-redemption a possibility. In addition, vouchers may introduce market mechanisms between training providers. However, empirical evidence suggests that voucher allocation mechanisms prolong the unemployment duration of training participants. But, after an initial period of deterioration, better long-term employment opportunities are possible.

How important is career information and advice?

Students’ decisions about their education can be, but are not always, improved by providing them with more information

10.15185/izawol.317 317 McNally, S

by Sandra McNally

The quantity and quality of educational investment matter for labor market outcomes such as earnings and employment. Yet, not everyone knows this, and navigating the education system can be extremely complex both for students and their parents. A growing economic literature has begun to test whether interventions designed to improve information about the costs and benefits of education and application processes have an effect on students’ behavior. So far, findings have been mixed, although the positive findings arising from some very carefully targeted interventions give cause for hope.

Privatizing sick pay: Does it work?

Employer provision of sickness/disability benefits reduces take-up but may also have unintended effects

10.15185/izawol.324 324 Koning, P

by Pierre Koning

Public schemes for sickness benefits and disability insurance are often criticized for the lack of incentive they provide for preventive and reintegration activities by employers. To stimulate the interest of employers in engaging with these schemes, several modes of privatization could be considered, including the provision of sickness benefits by employers, “experience rating” of disability insurance costs, employer self-insurance, or insurance by private insurance providers. These types of employer incentives seem to lower sickness rates, but they also come at the risk of increased under-reporting and less employment opportunities for workers with disabilities or bad health conditions. Policymakers should be aware of this trade-off.

Skills or jobs: Which comes first?

Jobs require skills, but they also build skills and create a demand for them

10.15185/izawol.339 339 Hentschel, J

by Jesko Hentschel

Skills are widely regarded as being necessary for boosting productivity, stimulating innovation, and creating new jobs, while skill mismatches are often cited as being responsible for a lack of dynamism in the labor market. However, heavy investments in technical and vocational training programs are seldom a “silver bullet.” Recent evidence on skill building not only points to the core importance of foundational skills (both cognitive and social) for success in the labor market, but also emphasizes how jobs themselves can lead to learning and shape social competencies that, in turn, ignite innovation and create more jobs.