Screening through Activation? Differential Effects of a Youth Activation Programme

Abstract

We study the dual role of active labour market policies: First, ALMP may perform a screening role by increasing the incentives for job search especially among individuals with good labour market prospects, already prior to programme participation. Second, actual programme participation may help individuals with poor labour market prospects. We examine whether this type of a pattern can be found in individual responses to a major nationwide youth activation programme in Sweden. We analyse individual responses to the programme using an RD design. We find that individuals with a high predicted probability of finding work respond to the threat of activation, whereas there is no effect for individuals with weak labour market prospects.