ALMP_ECON · Effective evaluation of active labour market policies in social insurance programs - improving the interaction between econometric evaluation estimators and economic theory

In most European countries social insurance programs, like welfare, unemployment insurance and disability insurance are characterized by low reemployment rates. Therefore, governments spend huge amounts of money on active labour market programs, which should help individuals in finding work. Recent surveys indicate that programs which aim at intensifying job search behaviour are much more effective than schooling programs for improving human capital. A second conclusion from these surveys is that despite the size of the spendings on these programs, evidence on its effectiveness is limited. This research proposal aims at developing an economic framework that will be used to evaluate the effectiveness of popular programs like offering reemployment bonuses, fraud detection, workfare and job search monitoring. The main innovation is that I will combine economic theory with recently developed econometric techniques and detailed administrative data sets, which have not been explored before. While most of the literature only focuses on short-term outcomes, the available data allow me to also consider the long-term effectiveness of programs. The key advantage of an economic model is that I can compare the effectiveness of the different programs, consider modifications of programs and combinations of programs. Furthermore, using an economic model I can construct profiling measures to improve the targeting of programs to subsamples of the population. This is particularly relevant if the effectiveness of programs differs between individuals or depends on the moment in time the program is offered. Therefore, the results from this research will not only be of scientific interest, but will also be of great value to policymakers.