Employment effects of investments in public employment services for disadvantaged social assistance recipients
| Author | Rasmus Ravn,Kristian Nielsen |
| DOI | 10.1177/1388262719836797 |
| Published date | 01 March 2019 |
| Date | 01 March 2019 |
| Subject Matter | Articles |
EJSS
Article
European Journal of Social Security
2019, Vol. 21(1) 42–62
Employment effects
ª The Author(s) 2019
Article reuse guidelines:
of investments in public
sagepub.com/journals-permissions
DOI: 10.1177/1388262719836797
employment services
journals.sagepub.com/home/ejs
for disadvantaged social
assistance recipients
Rasmus Ravn
Department of Political Science, Aalborg University, Denmark
Kristian Nielsen
Department of Business and Management, Aalborg University, Denmark
Abstract
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 dis-
advantaged 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.
Keywords
Caseload reduction, activation, employment effects, social assistance, difference in differences,
propensity score matching
Corresponding author:
Rasmus Ravn, PhD student, Department of Political Science, Aalborg University, Fibigerstræde 1, Building 20, 9220 Aalborg,
Denmark.
E-mail: rr@dps.aau.dk
Ravn and Nielsen
43
Introduction
OECD countries are increasingly attentive to the fact that many people are leaving the workforce
due to poor health or disability. There is a growing consensus that taking a disability pension, long-
term sickness, absence, and reliance on income transferring benefits due to health problems need to
be reduced. A number of OECD countries have already taken steps to improve employment rates
and labour force participation by reforming benefit systems and intensifying active labour market
policies (ALMP) for these target groups (OECD, 2010). This is especially important because of the
demographic challenges that many countries will face in the future with higher life expectancy and
fewer individuals of working age relative to the population. Despite the increased efforts, the
knowledge base about how ALMPs should be designed for hard-to-employ individuals and persons
with reduced working capacity is still quite limited and needs improvement (Bredgaard 2015;
Martin, 2014).
The Nordic countries have historically served as model countries because of the significant
resources they allocate to ALMPs but all these countries are now undergoing considerable change
through policy reforms (Breidahl and Clement, 2010; Minas et al., 2018). This has certainly been
the case in Denmark, where recent reforms aimed at the disability pension scheme, sickness
benefits, and social assistance have focused on increasing employment by tightening eligibility
criteria and promoting further activation in ALMPs. In Denmark, local municipalities are respon-
sible for the delivery of activation policies but are reimbursed by the state for some of their
expenditure for income transferring benefits and ALMPs. Furthermore, Denmark’s governance
structures are changing. In 2014, a political agreement was reached to change the reimbursement
system, which is set to start in 2016. The new reimbursement model will gradually reduce the level
of reimbursement for municipalities to compensate them for their expenditure on income transfer-
ring benefits. The purpose of the reform was to strengthen the incentives for the municipalities to
deliver effective employment services for all target groups (Andersen, Caswell and Larsen, 2017).
In response to these reforms, one of the municipalities in Northern Denmark (Hjørring) decided
to invest heavily in ALMPs that targeted disadvantaged groups in the benefit system (primarily
focusing on social assistance recipients). The aims of the investments were to increase the employ-
ment rate of the target group by: 1) significantly reducing the caseloads of social workers in the
employment service by hiring additional staff; and 2) allocating additional resources to help with
the activation of the social assistance recipients.
Combining longitudinal population register data from Statistics Denmark with detailed infor-
mation on employment, health care use, benefit receipt and other personal characteristics, we
investigate the effects of these changes on subsequent employment in this municipality by using
difference-in-differences regression and propensity score matching. In the Danish context, the
investment in Hjørring is at a historically high level and represents an innovative and experimental
approach to delivering the activation of disadvantaged social assistance recipients. Thus, the
intervention provides an excellent opportunity to add to the existing knowledge base concerning
the effectiveness of caseload reductions in public employment services (PES) in bringing disad-
vantaged groups into employment (see Behaghel, Cr´epon and Gurgand, 2014; Hainmueller et al.,
2016; Krug and Stephan, 2016).
The remainder of the article is structured as follows. First, we identify what has been the main
focus of existing research with regards to the effectiveness of labour market policies. This is
carried out in order to show that the impact of social worker caseloads and collaboration between
caseworkers and clients has been neglected in existing research. Secondly, we provide background
44
European Journal of Social Security 21(1)
information about the treatment municipality, the intervention and the target group. Thirdly, we
present the longitudinal population data and the empirical strategies pursued to estimate the causal
effects of the policy initiative. Finally, we present and discuss the results of the study with
implications for future research and the design of ALMPs.
Review of the existing literature
We review existing research that focuses on the same intervention components as have been used
in the treatment municipality in this study. Thus, we structure the review around to two themes: 1)
caseworker and collaboration effects and the effects of meetings on employment outcomes, and 2)
caseload reductions in PES. The latter is a recent and underexplored research area.
The focus of existing research on active labour market policies
An extensive body of research focuses on the programme effects of specific ALMPs. The overall
impact can work through different mechanisms: motivation/threat effects (before the interven-
tion starts), locking-in effects (during the intervention), or displacement or employment effects
after the programme (Rosholm and Svarer, 2008; Bredgaard, 2015). For unemployment benefit
recipients (unemployed with prior work experience and no work-hindering problems), much
evidence suggests that firm-based activation (e.g. on-the-job training, internships, and short-term
subsidised jobs) is effective and classroom training appears to be effective in the medium term
(Card, Weber and Card, 2010; Kluve, 2006). For disadvantaged unemployed claimants facing a
variety of problems, there is some evidence to suggest that firm-based activation may be most
effective (Graversen, 2012). In Denmark, evidence suggests that activation in general may be
somewhat effective (Rosdahl and Petersen, 2006). In sum, existing research has paid a great deal
of attention on examining which interventions are effective (see also Card, Kluve and Weber,
2018). Through this strand of literature, it is possible to gain some helpful insights into which
interventions might be effective. However, as will become evident, much less research has
examined the effects of caseload reductions in public employment services and the impact of
collaboration between caseworkers and clients. This is despite the fact that the social work
practiced in the public employment service and the interactions between the caseworker and
the client shape the content and type of activation in which the client has to participate (Larsen
and van Berkel, 2009; Danneris and Dall, 2017).
An argument for shifting the primary focus from specific interventions to caseloads, as we
outline in the present article, can be found in the body of work on street-level bureaucracy (e.g.
Lipsky, 2010) and in particular in the work on street-level bureaucracy in employment services
(e.g. van Berkel and Knies, 2016; van Berkel et al., 2017). The central tenet in the literature on
street-level bureaucracy is that frontline workers are essential in the implementation and delivery
of policies to citizens. In other words, street-level bureaucrats shape the policies that citizens
receive (Zacka, 2017). In an employment service context, the caseworker is responsible for
meeting with the client and planning which ALMPs the client has to participate in in order to
be eligible for benefits. Here, caseworkers have to balance employment-oriented goals, ethical
considerations, the wishes of the clients, economic considerations and more when choosing their
approach towards a particular client (Nothdurfter and Olesen, 2017). Caseworkers in employment
...
To continue reading
Request your trial