Employment effects of investments in public employment services for disadvantaged social assistance recipients

Across the OECD countries, there is a growing consensus in favour of targeting active labour market policies (ALMP) on the disadvantaged unemployed and persons outside the labour force to increase their employment prospects. Despite increased efforts, little is known about what works for getting persons with physical, mental, and social problems into employment. Using difference-in-differences regressions and propensity score matching on longitudinal population register data from Denmark, we investigate the effects of investment in public employment services for disadvantaged social assistance recipients, where social worker caseloads have been severely reduced and active employment measures for the target group have intensified. We find significant and robust positive effects of intervention on subsequent employment outcomes for disadvantaged, hard-to-employ social assistance recipients, suggesting the need for an increased focus on this target group in future research and in the design and implementation of ALMPs.