Tuesday, January 10, 2012

The effect of temporary subsidised employment on employability.

Temporary subsidised employment (TSE), like the Job Guarantee, and the training that is often associated with TSE hopefully raises or at least maintains the employability of those concerned. But is this the actual effect?

These two studies done in Switzerland claim that TSE in the private sector produces significant benefits. In contrast, the benefits of public sector TSE are not as good. As to training, the benefits are not as good as private sector TSE.

TSE does not seem to bring benefits for those with a good chance of finding work anyway (not a big surprise, I suppose).

The above two categories “private sector TSE” and “public sector TSE” do not capture the actual nature of the various TSE schemes in Switzerland with 100% accuracy. But they are a more or less correct characterisation. Anyone interested in precise definitions will have to look at the papers.

1. “A Microeconometric Evaluation of Active Labour Market Policy in Switzerland” 

2. “Does Subsidised Temporary Employment Get the Unemployed Back to Work?”

Some other bits of empirical evidence are as follows.

3. Booth, A.L., Francesconi, M. and Frank, J. (2000), ‘Temporary jobs: Who Gets
Them, What Are They Worth, And Do They Lead Anywhere?’ Discussion Paper 00/54, Institute for Labour Research, University of Essex.


This paper showed that those prepared to do temporary jobs (not necessarily subsidised jobs) fared better in subsequent employment histories than those not prepared to do temporary jobs. This effect was more marked for women than men.

4.  Calmfors, L., Forslund, A. and Hemstrom, M. (2002), ‘Does Active Labour Market Policy Work? – Lessons from the Swedish Experience’, Institute for Labour Market Policy Evaluation, Uppsala.

This confirms the Swiss finding that TES – i.e. “learning by doing” – yields better results than formal training.

5.  Bolvig, I., Jensen, P. And Rosholm, M. (2003), ‘The Employment Effect of Active
Social Policy’, Discussion Paper 736, Institute for the Study of Labour (IZA), Bonn.

This pretty well confirms the above studies, with the surprising additional claim that training actually IMPAIRS employability.


Afterthought (11th Jan). Here is another paper by Calmfors & Co with a more pessimistic take on the benefits of TSE and similar labour market programs. Title of paper: “The effects of active labour market policies in Sweden: What is the evidence?”. See:




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