The Job-First Program
Introduction
The Job-First Program in Denmark seeks to provide job training for long-term unemployment welfare recipients. The program targets those over the age of 30 who have been assessed as not job-ready. Arendt and Bolvig (2024) evaluates the program using a randomized control trial. Over 3,200 individuals across 15 municipalities participated in the trial. Participants were randomized to the treatment group or the control group (which received the standard employment support). Both control and treatment groups met with representatives from various workplaces. After finding a match, the treatment group received on-the-job training as well as a mentor at the job center and contact person at the firm. The hope of the program was to eventually replace unpaid hours contracted labor for the firm.
The paper finds that the program pushes recipients in two directions – either part-time/full-time work or disability benefits, depending on if they showed a permanent inability to work.
MVPF = 0.4
Net Cost
The main cost to the government is the direct cost of providing training: $4,560 per participant. The authors then calculate the fiscal externality that results from changes in behavior. As Job-First recipients are more likely to work and earn income after the policy intervention, they pay back $493 on average in taxes. The government pays out an average of $4,189 less in unemployment benefits per participation. However, some participants switched to disability pension after the program, resulting in an average $2,654 in disability benefits per participant.
The total net cost is then $4,560 – $493 – $4,189 + $2,654 = $2,532.
Willingness to Pay
The paper assumes that the recipients are indifferent between working/receiving disability pensions and receiving unemployment benefits, and thus their only value for the program is due to explicit changes in net income. They find an increase in pre-tax labor income of $3,076 ($2,583 after tax). On average, participants receive $4,189 less in unemployment benefits but gain $2,654 in disability benefits.
Thus, the willingness to pay (change in net income) is $2,583 – $4,189 + $2,654 = $1,048 per participant.
MVPF Summary
With a net cost of $2,532 and a willingness to pay of $1,048/$2,532, the estimated MVPF is $1,048 = 0.41.
References
Arendt, Jacob and Iben Bolvig (2024). “Training the Long-Term Unemployed on the Margin for Disability Pension.” Working Paper. https://dx.doi.org/10.2139/ssrn.4940724.
Policy Features
- Category
- Education
- Sub-Category
- Job Training
- Beneficiary Type(s)
- Adults
- Average Age
- 44
- Country of Implementation
- Denmark
- Year of Implementation
- 2017
- Empirical Method
- RCT
- Research Type
- Primary
- Peer Reviewed
- No
- MVPF Publication Link
- dx.doi.org/10.2139/ssrn.4940724