Labor market and health effects of an activation program for the long-term inactive
Date and time
August 28, 2019
12:30 - 13:30
Some active labor market programs have been shown to improve labor market outcomes, however they mostly focus on individuals relatively close to the labor market. Many long-term benefit recipients suffer from mental health issues, indicated by the high rate of mental health care use in this group. Activation strategies for this group may not result in better labor market outcomes, but may benefit these individuals by replacing some of the benefits that a job offers such as providing a routine, social network and a sense of being valued or appreciated. We evaluate the effects of an activation program for individuals with a large distance to the labor market, at least five years out of employment and on general assistance. We exploit the staggered implementation of the program which allows for a difference-in-difference design. We find that the activation strategy decreases general assistance receipt, but we find no increase in employment nor benefit substitution. Moreover, we find an increase in drug use, partially driven by mental drug use. The exit out of general assistance is concentrated among those with a relatively short general assistance duration pre-treatment (5-9 years), whereas the drug effect is concentrated among those with the longest general assistance duration (at least 14 years).