Inequalities in active employment programmes

Denmark has been pursuing what is called an active employment policy for decades. Under this policy, for example, unemployed people must attend compulsory interviews at job centres or are sent into ‘activation’. 

Now, a new study of the long-term effect of these initiatives shows that there is probably a positive effect on employment opportunities for the more resourceful unemployed. However, the study also shows that the initiatives have had no effect on employment opportunities of the less resourceful unemployed. Moreover, it can adversely affect their mental health, and many more in this group have ended up on permanent public support. 

The study was a collaboration between Martin Bækgaard, a professor of political science who has spent several years researching the effects of administrative burden on citizens, and Michael Svarer and Michael Rosholm, professors of economics who have both studied labour market economics for several years. Assistant Professor Søren Albeck Nielsen from the Department of Economics and Business Economics also contributed to the study, which has been published in the prestigious journal Proceedings of the National Academy of Science (PNAS). 

This raises the question of what we want to achieve with the active employment policy that politicians are currently discussing. Our study shows that we need a more differentiated approach

^{Professor Martin Bækgaard, Department of Political Science, Aarhus BSS}

One size does not fit all 

"The study very clearly shows that, so far, the 'one size fits all' approach to active employment programmes has not worked as intended. Although some groups are helped back into the labour market, other groups are simply worse off than they were before the initiatives," explains Michael Svarer, and Martin Bækgaard adds: 

"This raises the question of what we want to achieve with the active employment policy that politicians are currently discussing. Our study shows that we need a more differentiated approach." 

For the group of newly unemployed recipients of unemployment insurance benefits, we found quite a significant effect on the degree of employment and income compared to the control group

^{Professor Michael Svarer, Department of Economics and Business Economics, Aarhus BSS}

Long-term effects 

The study is based on five randomised trials conducted in 2005-2006 and 2008, respectively, in which groups were exposed to additional active initiatives in the form of more frequent conversations either individually or in groups and/or early activation.  

There were two initial trials: one was conducted among just over 4,000 newly unemployed recipients of unemployment insurance benefits, while the other involved almost 3,500 recipients of social assistance benefits, who had been unemployed for more than six months. There were also three smaller trials among newly unemployed recipients of unemployment insurance benefits, in which efforts were divided up. 

In all five trials, the effects of the initiatives were compared with a control group who received the current ordinary active employment interventions. 

The researchers looked at the long-term effect of the various initiatives in 2024: up to 10 years after the initiatives. Specifically, the researchers analysed the effects on employment, based on income and on mental health. The mental health analysis was based in particular data on prescriptions for antidepressants.

I 2024 har forskerne nu set på, hvad langtidseffekten af de forskellige indsatser har været i op til 10 år efter indsatserne. Konkret har forskerne analyseret effekterne på beskæftigelse baseret hovedsageligt på indkomst, og på mentalt helbred baseret på især udskrivelse af recepter på antidepressiv medicin.

Positive and negative 

"For the group of newly unemployed recipients of unemployment insurance benefits, we found quite a significant effect on the degree of employment and income compared to the control group. This group generally had good outcomes. We also found that a combination of frequent individual interviews and early activation had the greatest effect," explains Michael Svarer. 

Specifically, the effect of the intensified efforts is an increase in income of 4.8 per cent compared to the average for the control group. 

However, the story is quite different for the group of more long-term unemployed social assistance benefit recipients. 

"On the face of it, you might think that this group would have the greatest potential for an effect. But we also know that the group is more vulnerable, and we found absolutely no effect on employment compared to the control group. Neither in the short term nor the long term," explains Martin Bækgaard. 

Read also: Demands cause stress among unemployed people

Antidepressants 

On the other hand, there are significant negative effects on mental health. 

"There is a significant increase in the use of antidepressants, even after 10 years, and the increase is concentrated on the people in the group who were already on the medicine," says Martin Bækgaard. 

Specifically, an increase of 35 per cent compared to the control group. 

Furthermore, 10 years after the interventions, disability pensions awarded to this group had increased by 24 per cent relative to the control group. 

"All in all, the active employment policy has clear benefits for certain groups, but just as obvious costs for the less resourceful groups in society," says Martin Bækgaard.

Facts

We strive to comply with Universities Denmark’s principles for good research communication. For this reason, we provide the following information as a supplement to this article: