Active Program Lock-In Effect
RCTReview
Assigning unemployed job seekers to mandatory classroom training or subsidized employment programs reduces time and availability for active job search activities during program participation. Consequently, ongoing program participation temporarily depresses the exit rate into unassisted employment compared to non-participants.
Picture this
Think of mandatory training like a full-time school schedule. While a job seeker attends classes every day, fewer hours remain available to search for jobs, submit applications, or attend interviews, causing the individual to temporarily freeze their job search until the course finishes.
What the evidence says
Specific active labor market programs exhibited zero positive direct impacts during participation, showing statistically significant negative lock-in effects on unemployment exit rates during program weeks and negative post-program effects across training, subsidized job, and education categories.
- Who was studied
- N = 4,513 unemployed benefit recipients in Storstrøm and Southern Jutland counties, Denmark.
- How
- Randomized Controlled Trial (RCT) analyzed via parametric Mixed Proportional Hazard duration modeling with time-varying program indicators.
What to do
Minimize the duration of classroom-based active labor market courses and shift policy emphasis toward direct job placement assistance to prevent workers from pausing active job search.
From the source
"None of the specific treatments have positive effects, indeed, some of them have large negative lock-in effects, and some even have large negative post-programme effects."
bc5b372e-5470-4162-9864-568cdcec4a00-Experimental Evidence on the Nature of the Danish Employment Miracle.pdf