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The Threat Effect of Active Labour Market Programmes *
Author(s) -
Rosholm Michael,
Svarer Michael
Publication year - 2008
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/j.1467-9442.2008.00544.x
Subject(s) - unemployment , spell , economics , active labour market policies , labour economics , duration (music) , value (mathematics) , sample (material) , affect (linguistics) , demographic economics , economic growth , psychology , chemistry , literature , communication , chromatography , machine learning , sociology , anthropology , computer science , art
In this paper, we estimate the threat effect of active labour market programmes (ALMPs) for a sample of unemployed men in Denmark. Threat effects of such programmes capture the impacts of a system of ALMPs prior to actual participation. Rational economic agents make search decisions based on the expected discounted value of unemployment, and the perceived risk of future participation in programmes may affect job‐search behaviour early in the unemployment spell. We find a strong and significant threat effect, which is shown to reduce average unemployment duration by two and a half weeks.