Wage Effect of a Social Experiment on Intensified Active Labor Market Policies

This study paper investigates the effect of Denmark's intensified 'active labor market policies,' which is increasing the threat of program participation on post-unemployment wages. For this purpose, the paper examines a social experiment conducted in two Danish counties where approximately 5,000 unemployed people were randomly selected to receive either a standard treatment or an intensified treatment. It uses a Heckman selection model and finds that an intensified threat of program participation increases the probability of finding a job in the short run, but decreases wages in the same period. (Series: The Rockwool Foundation Research Unit - Study Paper - Vol. 49)