Help or harm? Examining the effects of active labour market programmes on young adults’ employment quality and the role of social origin

Abstract

Active labour market programmes (ALMPs) should help young adults who collect welfare benefits ‘get back on track’. Despite the recent proliferation of research on ALMPs, only scant attention has been paid to their employment quality effects. Aiming to fill this gap, this article evaluates the long-term effects of German ALMPs on young adults’ employment quality. We measure employment quality with two indicators: one on whether someone has a job with earnings below the low wage threshold and the other on whether they have a job with earnings above the low wage threshold. These measures help us assess whether ALMPs prevent young adults from being at risk of poverty again. In addition, we study whether ALMP effects vary by social origin. We distinguish young adults by whether their families collected benefits when they were adolescents, as a marker for disadvantaged social origin. We analyse in-firm training and one-euro jobs as examples for enabling and workfare programmes, which exist across other welfare states as well. Empirically, we apply an entropy balancing approach to a self-drawn sample from registry data to analyse ALMP treatment effects. Results show that in-firm training enhances young adults’ employment quality in the long run. The effects tend to be lower for those from disadvantaged families though, indicating that disadvantages embedded in social origin remain. The workfare programme harms participants’ employment quality, with those less disadvantaged suffering the greatest damage. Overall, our research provides evidence that in-firm training effectively enables young adults to find a job of higher quality, addressing their risk of social exclusion and proving useful in promoting upward social mobility. Nonetheless, the article also raises urgent issues concerning how the needs of those most vulnerable can be addressed by social policy.