The Health Effects of Active Labor Market Policies – University of Copenhagen

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14 September 2018

The Health Effects of Active Labor Market Policies

Robert Mahlstedt presents at the annual meeting of the European Association of Labour Economists (EALE) in Lyon.

Abstract

Comprehensive evidence has shown that unemployment can have adverse effects on an individuals' mental and physical health condition. However little is known about the health effects of governmental policies that aim to promote the unemployed's reintegration into the labor market. On the one hand, these interventions could have positive effects on the health status of participants if they increase the chances of finding new employment, however, on the other hand, they might also have unintended consequences as participation per se might be stressful. We analyze the consequences of two different policies: 1) training programs that represent a group of supportive measures (carrots) and 2) sanctions as a very restrictive intervention (sticks) for on an inflow sample into unemployment in 2006 and 2007 using a combination of Swedish administrative data on employment and prescription drug records. Based on the Anatomical Therapeutic Chemical (ATC) Classification System, we identify three common types of health problems that can be assumed to show up and to be diagnosed quickly after a potential intervention: cardiovascular problems, mental health issues and infections. We apply a dynamic difference-in-difference approach accounting for detailed information on socio-demographics, employment biographies and the individual prescription drug history. Our results show positive health effects of training, but no effects of sanctions.